Private Equity Is Looking for a Little Help

Things aren’t going all that great for private equity firms. They’re struggling to sell the companies they own and return cash to investors. But it turns out their counterparts in the world of private credit are offering special loans to tide them over. Direct lending arms at shops from Ares Management to Neuberger Berman Group and even private equity titan KKR have all launched what some are calling “dequity” funds—to convey the presence of both debt and equity—to the tune of $30 billion industry-wide since 2023.

Demand for this type of stopgap financing has soared lately as cash-strapped PE firms face a prolonged deal drought. Higher borrowing costs as well as erratic US trade policies have made it harder for corporate buyers to appraise the value of potential targets or for sponsors to figure out how public stock offerings will go. That’s left PE firms saddled with their portfolio companies longer than they’d planned, creating a situation where they don’t have enough money to distribute to their limited partners.