LONDON, June 12 - Senior executives gathered at the private markets industry’s largest annual conference in Berlin this week described a backdrop of softer revenues and tougher fundraising conditions, echoing a broader assessment from consultancy Bain & Co that private equity is undergoing a prolonged "liquidity crunch."
At the conference, Nicolas Brugere, a partner at Swedish buyout firm EQT, said limited partners - the institutional investors that supply capital - sought to see capital returned before committing to further capital, and that this dynamic was driving greater concentration within the industry. "Investors want fewer relationships and they value scale," he said.
Also speaking on the panel, Matt Theodorakis, a partner at Ares Management, a major private credit manager, pointed to a slowdown in inflows and a pullback of capital. He said: "What we see in our investment committee, which is over the last three to six months, is that money subsided," highlighting how a reduction in distributions is being felt across market segments from buyouts to credit.
Bain’s report described an increasing number of companies becoming trapped inside private equity portfolios. The consultancy cited a combination of falling software valuations, lingering uncertainty around the Iran war and stress in private credit markets as factors cooling dealmaking, fundraising and exit activity. As a consequence, private equity firms are holding assets for longer periods, with the average holding period rising to roughly seven years, beyond the traditional three to five years. Bain also reported that the backlog of unsold companies has risen to about 33,000.
Complementing those observations, a Reuters analysis of regulatory filings examined dividend mechanics at U.S.-listed private-credit lenders and found that payouts depend on slimmer cash cushions than headline earnings figures imply, increasing potential risks for investors attracted by the sector’s high yields.
On measurable coverage metrics, median dividend coverage across 46 business development companies (BDCs) fell to 0.99 times in the first quarter of 2026, meaning reported net investment income no longer fully covered regular and supplemental payouts. When payment-in-kind interest, which allows borrowers to defer interest by adding it to their loan balances, is excluded, median coverage declined further to 0.89 times.
Redemption activity extended into the second quarter. A $25 billion BlackRock private credit fund received redemption requests representing 13.3% of the fund’s net asset value in the first quarter and said it will repurchase 5% of its assets, the firm said on Friday. At the same time, redemption windows at several key U.S. non-traded BDCs began to close last month, with market participants monitoring the pace of withdrawal requests closely.
Survey evidence from J.P. Morgan analyst Kabir Caprihan indicated market expectations of continued redemptions: roughly 85% of investors surveyed expected total second-quarter redemption requests across non-traded U.S. business development companies to exceed the volume seen in the first quarter.
Implications and context
The commentary from dealmakers and the data on dividend coverage and fund-level redemptions together paint a picture of constrained liquidity and heightened investor selectivity across private markets. Firms that rely on steady distributions to satisfy income-seeking investors face pressure as coverage ratios drop below the level needed to fully underwrite regular payouts. At the same time, buyout firms confronting an expanded holding period and a backlog of unsold assets may see valuation and exit timelines stretched.
Market participants are therefore watching capital flow metrics and redemption behavior closely as indicators of stress that could influence deal activity and fundraising across private equity, private credit and related BDC structures.