New Zealand Private Credit Market Expansion Driven by AIP Capital
New Zealand’s private credit market is experiencing a rapid expansion, fueled by billions of dollars in foreign capital flowing through the Active Investor Plus (AIP) visa programme, according to an NZ Herald report. While the local sector remains a fraction of Australia’s A$200-250b market and the multi-trillion-dollar industries in the United States and Europe, domestic funds are scaling rapidly as tighter bank lending standards create a funding gap for smaller enterprises and infrastructure projects.
Foreign Capital Inflows and AIP Visa Rules Shape Growth
Immigration New Zealand figures show that $2.72b in capital had been committed and transferred through the AIP programme by September 2, with a further $2.215b in the pipeline. Under revised settings that took effect in April 2025, Growth-category applicants must invest at least $5m for three years, while Balanced applicants must invest at least $10m for five years.
Sharad Nair, founder and board member of SFS Private Wealth and an AIP visa holder, says New Zealand’s strategy must now shift from attracting capital to retaining it.
“The fact is, when due diligence is being done on these individuals, Immigration New Zealand knows what their wealth looks like and knows that only a small piece of it is coming in,” Nair said, as reported by the NZ Herald. “From there on, you need to build platforms for them to interact with the opportunity.”
The first Growth-category investment periods are scheduled to begin expiring in 2028. Portfolio manager and senior credit analyst Simon Pannett of Harbour Asset Management noted that AIP rules explicitly prohibit property lending, which protects the local sector from the volatile construction cycles seen in overseas markets like Australia.
Contrasting Domestic Lending Models with Overseas Risks
Local industry leaders emphasize that New Zealand’s private credit ecosystem operates differently from overseas jurisdictions where overexposure to real estate has triggered regulatory scrutiny. Paul Carman, managing partner at Private Capital Group—which manages about $750 million—says the local market is often misunderstood.
“Ostracisbly, in our mind’s eye, [private credit] becomes misunderstood, and I think it is still broadly misunderstood in most jurisdictions, even though markets like the UK, the US and Europe are so mature,” Carman said, according to the NZ Herald.
Carman established Private Capital Group in 2019 following a Reserve Bank of New Zealand (RBNZ) capital review that required traditional banks to hold more capital relative to their risk profiles. Unlike traditional lenders, private credit providers do not take retail deposits and are therefore exempt from those specific bank capital review requirements.
However, international regulators have issued warnings about opacity and underwriting standards. In May, the European Central Bank highlighted that defaults linked to private credit markets—such as First Brands and Tricolor—demonstrated how vulnerabilities can transmit across the broader financial industry. Across the Tasman Sea, Australian Securities and Investments Commission (Asic) commissioner Sarah Court raised concerns regarding transparency and risk concentrations following the collapse of the Australian real estate developer Bathla.
Regulatory Oversight and Bank-Lending Autonomy
The Reserve Bank of New Zealand maintains that the domestic banking system has limited direct exposure to private credit funds. In a statement to the NZ Herald, an RBNZ spokesperson noted that local banks primarily lend to businesses backed by private credit firms rather than directly to the funds themselves, keeping interconnections transparent.
“While there is limited data available on the scale of private credit activity in New Zealand, we engage with private credit firms and other financial sector participants through our regular liaison programme to monitor developments in the sector as part of our system monitoring role,” the RBNZ spokesperson said.
Dr Claire Matthews, dean of the Massey University School of Accountancy, Economics and Finance, points out that while private credit helps fill a funding gap for small and medium-sized enterprises (SMEs) locked out of traditional bank channels, investors must carefully evaluate underlying security.
“There is a place for these entities, but it really comes down to making sure that they are getting appropriate security to cover the lending that they’re doing, and assessing those loans well,” Matthews said, as reported by the NZ Herald. She cautioned against overconcentration, noting that relying solely on private credit investments undermines portfolio diversification.
With banks still occupying roughly 95% of New Zealand’s lending market compared to 25% to 40% in the US and Britain, operators like Private Capital Group and Aotea Asset Management continue to eye long-term expansion in business and infrastructure lending. Yet, as the first wave of AIP investment periods approaches expiration in 2028, questions remain over how effectively New Zealand can integrate these high-net-worth investors into the wider domestic financial architecture.
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