Private Credit: A new opportunity in Austria

Private Credit: A new opportunity in Austria

Private Credit has been eyeing Austrian borrowers and situations for a while, but so far fund-originated lending to Austrian counterparties came with regulatory complexities overcoming which required a fact pattern that permitted doing so, a certain appetite and a fair amount of highly specialised legal advice implementing it. This will change in the near future.

On 7 July 2026, the Austrian National Council passed the bill implementing AIFMD II (Directive (EU) 2024/927), giving loan-originating AIFs a clear, EU-wide aligned regulatory framework for Austria. See here what that means with a view to structuring the next deal.

Less complexity, lower risk, lower costs

With the mentioned bill being implemented, AIFs will be expressly entitled to originate loans directly to Austrian borrowers. EU AIFMs do not need a banking licence to market, source, negotiate, agree and extend loans in Austria. Granting loans in an AIF’s name is now explicitly a permitted AIFM activity travelling with an AIFM passport across the EU. This will be a significant improvement for AIF managers who previously faced regulatory complexity when lending into Austria including a certain level of risk and increased transaction costs to address both.

And what now?

For various reasons which certainly included enhanced regulatory complexity and despite a certain level of activity, private capital did not have its laser focus on the Austrian market so far. With the threshold on the regulatory end to be significantly lowered (together with cost and risk in this respect) we expect the market to reassess. As in other markets, on the one side there is potential due to more restricted bank lending but we also see momentum in transactions where speed, flexibility and bespoke or non-conventional structuring matter. Thinking of acquisition financings backing sponsor-led buyouts, growth and venture debt, subordinated or unitranche tranches sitting alongside senior bank debt, and financing for special situations or restructurings where other lenders' risk appetite fades. These will be some of the situations where private credit can further build footprint in Austria as in other markets such as in Germany.

The fine print 

A number of substantive guardrails need to be considered.

• 20% concentration limit per borrower where the borrower is itself a financial undertaking, AIF or UCITS.
• 5% risk retention on loans which are transferred to third parties (e.g. syndicated or sold down).
• No lending to consumers – Austria has reserved that for licensed banks only.

In addition, once a fund qualifies as a “loan-originating AIF” (broadly: if loan origination is the fund’s main strategy, or originated loans make up at least 50% of the fund’s net asset value):

• Closed-ended structure as the default (open-ended only with regulator sign-off on liquidity management).
• Leverage caps of 175% (open-ended) / 300% (closed-ended).

These requirements are in line with AIFMD-based requirements elsewhere in Europe – with Austria now catching up. 

What's next

The bill now moves to the second chamber of the Austrian parliament (Austrian Federal Council), which has an eight-week window to object. Once cleared, promulgation and entry into force is expected shortly after. 

If you're planning to originate into Austria, now is the time to check whether your existing fund and AIFM setup already ticks the boxes – or what needs adjusting. We're tracking this closely and happy to talk through what it means for your next Austrian deal.