The news created some waves, but this isn’t really a story about one lender getting one loan wrong. Blue Owl may have been acting entirely in good faith, and every individual mark may have been technically defensible under the applicable accounting framework.

That’s the problem.

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Whether Blue Owl got Loparex wrong is nearly beside the point (OBDC’s total position before the write-down was ~1.4% of total assets). The more interesting question is whether anyone outside Blue Owl could have known it was wrong.

And the most interesting question of them all is what that means for a $1.8 trillion private credit market.

There is no continuously observable price telling investors what a private loan is actually worth. Instead, there is an appraisal-like process: management estimates fair value, an independent valuation firm reviews the methodology, auditors test the process, and investors receive the number with a three-month delay.

A mark can be perfectly reasonable under accounting rules and still turn out to be spectacularly disconnected from economic reality.

Check out this Medallia chart:

And here’s the story on that loan:

The counter-argument, of course, is that public opinion can be spectacularly disconnected from economic reality too. But in the public markets, at least, investors have the option to trade on that information (or sell and cut their losses). That latter option is not available to investors in OBDC II, which also holds the Loparex loan.

Speaking of OBDC II:

The private credit ecosystem asks investors to treat internally generated estimates as if they were observable market prices. Unfortunately, we have very little way of knowing how wrong those estimates are (until something breaks).

What Happened

Back to issue at hand. Loparex makes very decidedly non-software things like engineered films and silicone release liners. That’s the backing you peel off a label or a bandage. (I too, had no idea what they were called).

In August 2019, Pamplona Capital Management acquired the company with roughly $600 million in debt, implying leverage of approximately 7.6x EBITDA. A bolt-on acquisition a few months later pushed leverage closer to 8x.

Enter our protagonist, Blue Owl, then Owl Rock Capital Corporation, who underwrote the second-lien loan at closing. This was a direct origination. Blue Owl held it exclusively across two BDCs: $112 million of the second lien on OBDC’s books; and $28 million on the books of its smaller sibling, OBDC II (4:1 investment ratio, that split will remain constant throughout the years).

A second tranche was added for the bolt-on. Combined par across both vehicles: approximately $172 million. For the next four years, the positions were carried near par.

The Restructuring

I’ll spare you the full saga of what Covid —> supply chain issues —> cost increases did to the financials of the borrower. Suffice it to say the company, saddled with substantial leverage, has not done well.

By January 2024, every party in the capital structure had retained restructuring counsel. In March’24, Loparex executed one of the year’s most aggressive liability management exercise (LME). This was an uptier transaction (when some creditors get priority over others).

From Octus: “Loparex completed a liability management exercise in 2024. In the first stage of the Loparex transaction, 75% of the first lien lenders provided $135 million of new money in the form of tranche A of a new superpriority term loan facility due February 2027.

They also swapped their $334 million of the $354 million U.S. dollar S+450 bps first lien loan due July 2026 and $76 million of the $194 million euro E+525 bps first lien loan due July 2026 for first-out with a total principal of $175 million, $280 million of S+450 bps second-out term loan and $120 million of S+450 bps third-out term loan.”

In plain English: the deal created a five-layer waterfall in repayment priority. The lenders who put up new money jumped to the front of the line. Everyone else got pushed down.

S&P downgraded the company to selective default, deeming the exchange tantamount to default because non-participating lenders received materially less than originally promised.

On April 12, 2024, S&P upgraded Loparex from SD to CCC+ with a negative outlook. The language in that report is not pretty, let’s put it that way. S&P explicitly stated that the capital structure remained “unsustainable” and assigned recovery ratings across the new tranches.

S&P’s recovery rating scale runs from ‘1’ (highest expected recovery, 90–100%) to ‘6’ (lowest, 0–10%). At origination in 2019, S&P assigned the second lien a ‘6.’ After the 2024 LME, S&P affirmed it.

Here’s the full post-restructuring picture:

• Tranche A (superpriority new money): ‘B’ rating, ‘1’ recovery (90–100%)

• First-out and second-out: ‘CCC+’ rating, ‘3’ recovery (50–70%)

• Third-out and existing first lien (non-participating): ‘CCC-’ rating, ‘6’ recovery (0–10%)

• Second lien: ‘CCC-’ rating, ‘6’ recovery (0–10%)

❓Pop quiz: which tranche did Blue Owl hold?
Yes, it was the very bottom one. $166 million of their $172 million total exposure (96%) sat in the second lien.

Monroe Capital

If you are doing mental math, you know we’re missing some $400 million dollars in loans (the company was purchased with ~$550 million in debt, Blue Owl’s exposure was around $172 million), so I tried looking for the “missing” money.

Monroe Capital Income Plus Corporation, a small BDC managed by Monroe Capital, held a tiny piece of Loparex’s original first-lien term loan (about $754,000 in par, acquired in April 2023.)

Pocket change compared with Blue Owl’s combined $166 million second lien.

But Monroe’s marks tell a story that Blue Owl’s don’t:

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On August 30, Apollo announced a $9 billion investment in ONEOK, the Tulsa-based midstream energy company. The headlines called it an “equity investment.” Technically, it is.

But upon closer inspection, it’s neither fish nor fowl. It’s equity with debt-like features, but not preferred equity. It has debt-like features but not the lender’s priority in repayment. It’s a financial instrument engineered so that both sides get to call it what they need it to be.

ONEOK gets $9 billion of capital that counts as equity on its balance sheet, doesn’t dilute existing shareholders, and helps reduce its leverage.

Apollo gets a contractual cash-flow stream that can potentially be packaged, tranched and sold as investment-grade securities to insurance companies and other institutional investors.

In other words: equity for the borrower, debt-like cash flows for the investor, and potentially investment-grade bonds for the eventual buyer.

Today we’ll walk through two things:

1. how this deal was structured on the corporate side,

2. and how equity gets converted into rated bonds.

If you missed the CLO article, you’ll want to read that first. This transaction isn’t technically a CLO, but the mechanism (taking contractual cash flows and turning them into rated securities) is nearly the same, with one important difference: a CLO diversifies across hundreds of borrowers, while this structure depends entirely on a single company’s cash flows.

This is what shows up on insurance balance sheets:

This is a case study examining the structure of a publicly announced transaction. It is based on SEC filings, public press releases, and reporting by Bloomberg. The author holds no position in ONEOK, Apollo, or any securities discussed. Nothing in this article is investment, legal, or financial advice.

What ONEOK is doing with the money

ONEOK is using the $9 billion for two things.

First, it’s acquiring Brazos Midstream’s natural gas gathering and processing assets in the Permian Basin for $4.4 billion. This nearly doubles ONEOK’s processing capacity in the region.

Second, it’s using roughly $5 billion to extinguish existing senior debt through tender offers, make-whole calls and term-loan repayment.

Net result: ONEOK gets bigger while reducing leverage. Pro forma 2027 leverage is expected to fall to roughly 3.25x debt-to-EBITDA, from around 4x.

And it does this without issuing common stock.

‼️ If ONEOK had issued $9 billion of new bonds, leverage would have gone the wrong direction. If it had issued $9 billion of common equity, existing shareholders would have been significantly diluted (current market cap is roughly $60 billion). Apollo’s structured equity lets ONEOK thread the needle.

The structure

This is the dense part (it’s your cue to get your coffee).

Read more

Well, CLOs are like that for me lately (no, I’m not shopping one, thanks for asking).

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Last fall, when First Brands filed for bankruptcy, I wrote about CLO mechanics (the fun stuff: the tranching, the waterfall, the difference between BSL and middle-market collateral).

If you missed that piece, start here:

Today’s piece is the companion. We’ll tackle a different question: why they work (and where they don’t).

‼️ CLOs, CDOs (collateralized debt obligations), CFOs (collateralized fund obligations) and a slew of other structured financial products are all the same species. No, they are not the same (think chihuahua vs. German shepherd: you won’t mistake one for another, but they are both dogs). Once you understand the mechanics, you'll be able to grasp newfangled wonders of finance, like the recent Apollo equity structuring (stay tuned, more on this in a separate post). And maybe you’ll start seeing them everywhere too…

📚 In the interest of keeping you awake, this article is fairly high-level. If you suffer from insomnia (or are dying to learn more about OC ratios for mezzanine tranches) I’ve included further reading at the end. Let’s get into it..

A Very Quick CLO Refresher

A typical broadly syndicated loan CLO issues six to seven rated debt tranches plus unrated equity. The AAA tranche (the largest slice, up to ~64% of the deal) gets paid first and benefits from substantial subordination beneath it.

That subordination means more than a third of the underlying loan portfolio would need to default with zero recovery before the AAA tranche loses a dollar.

Now look at the bottom of the stack (the dark blue equity slice in the chart above). The equity tranche has no guaranteed return. It collects whatever cash is left after every debt tranche above it has been paid (and after management fees, trustee expenses, etc).

In good years, that residual can deliver 15–25% cash-on-cash distributions. In bad years, overcollateralization tests fail, the waterfall redirects cash upward to senior debt tranches, and equity distributions stop entirely.

The median unlevered IRR for CLO equity vintages from 2003 through 2023 is approximately 11%. But median numbers only tell part of the story: deals priced at wide loan spreads (2008–2009, 2020) significantly outperformed, while tight-spread vintages (2014, 2021) delivered lower returns.

We’ve published case studies on several funds that hold CLO debt and equity on the books:

One important caveat: everything above describes broadly syndicated loan (BSL) CLOs. Private credit CLOs (sometimes called middle-market CLOs) are a slightly different animal. The underlying loans are to smaller, often unrated borrowers, with less liquidity, less transparency, and historically higher default rates.

To compensate, private credit CLOs are built with thicker cushions at the bottom: the AAA tranche is a smaller share of the deal, and the equity and junior mezzanine slices are proportionally larger. Spreads are roughly 200 bps wider than BSL equivalents. More on that here.

What Protects Senior Tranches

So how do you take a pool of below-investment-grade loans and turn them into AAA-rated securities?

Read more

Every other week, we send a quick digest on what’s catching our eye in private markets.

Before we get into it, here’s the chart of the day:

Non-listed BDC fundraising fell to $2 billion in Q2 2026 (an 82% drop from a year ago and the lowest quarterly total since 2020). Redemptions hit 12.4% of NAV, the highest level Stanger has ever recorded. Sponsors fulfilled 38% of requests and returned $5.9 billion (against a record $15.4 billion in requests), but net outflows still came in at roughly $3.8 billion for the quarter and $5.6 billion for H1. Aggregate NAV declined 3.1% quarter-over-quarter to approximately $122.4 billion.

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In this issue:

1️⃣ Private Credit: BDC fundraising hits a five-year low. But trapped investors are not willing to take a haircut to get out (yet?)

2️⃣ Commercial Real Estate: Apollo injects $1 billion into SREIT’s affordable housing portfolio. We’ll take a closer look at the deal terms below.

3️⃣ Private Equity: who’s actually investing in continuation funds? Plus, Vanguard makes a $4 billion bet on advisor infrastructure.

Accredited Insight delivers the LP’s perspective on private credit, private equity, and CRE, drawing on hundreds of deals reviewed, and thousands of conversations. Paid subscribers gain access to our database of over 40 case studies and articles on everything from evergreen funds to due diligence (the kind of analysis that tells you what the GP pitch deck left out).

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1️⃣ Private Credit

1. 26% discount was a no-go for trapped investors

Cox Capital Partners offered to purchase up to $90 million of shares in five non-traded BDCs managed by HPS, Apollo, Ares, and Blue Owl at an average 26% discount to NAV (I wrote about the Blue Owl fund here).

The result? Less than $5 million in orders. Apparently, investors want liquidity, they just don’t want to pay 26% for it. (Yet??)

Cox is now extending its tender offers to interval funds managed by Cliffwater and Variant Investments. Variant, for context, saw requests to redeem roughly 50% of its shares last quarter.

Meanwhile, on the publicly traded BDC side, the discount between NAV and share prices is starting to narrow. The S&P BDC index is up 6% QTD.

But the underlying pressure hasn’t exactly disappeared: defaults are up (you’ll find the chart here), fundraising continues to crater, while the largest public BDCs have seen their portfolios contract for three consecutive quarters, as repayments continue to outpace new originations.

2. BlackRock is shopping what’s left of TCP Capital

BlackRock is sounding out buyers for the $671 million loan portfolio remaining in TCP Capital Corp.

KBW has reportedly begun pitching the portfolio to firms including Ares, although talks are still early, Bloomberg reports. TCPC is also considering other options, including reinvesting, returning capital to shareholders, or merging with another entity.

This follows TCPC’s sale of $523 million of loans to a Pantheon-backed vehicle earlier this month. That was an interesting transaction, read the full story here:

2️⃣ Commercial Real Estate

1. SREIT’s $1 billion structured lifeline

Apollo is investing $1.02 billion in a joint venture with Starwood Real Estate Income Trust, the $22.5 billion non-traded REIT that suspended redemptions earlier this year.

The basic idea is simple:

• Apollo gets 41.5% of a portfolio of ~120 affordable-housing properties,

• SREIT keeps 58.5% and uses the proceeds to pay down debt.

But, as always, the interesting stuff is in the fine print (did I get you in the habit of opening SEC filings yet?)

Apollo’s investment is rated investment-grade and carries a guaranteed minimum yield that increases over time. SREIT owes those payments regardless of portfolio performance.

SREIT can buy Apollo out between years 5 and 12. If it does so in years 5–10, Apollo’s IRR is capped at 7%. The economics get increasingly expensive with a longer wait (higher minimum payments, make-whole contributions, and contingent obligations). If SREIT can’t meet those obligations, Apollo gets governance rights over the portfolio.

So the trade is pretty straightforward:

SREIT gets liquidity and time. Apollo gets a protected return.
(What do existing investors get? You tell me in comments please)

Economically, Apollo’s JV investment functions as preferred equity:

And here’s an example of a recapitalization in a one-off multifamily deal:

3️⃣ Private Equity

1. Who’s actually in continuation funds?

As continuation funds become a bigger story in PE, Preqin's latest data, as of April 2026, gives us a pretty interesting look at who's actually putting money into these vehicles:

Public pension funds (19.1%), foundations and endowments (18.8%), and private-sector pension funds (18.1%) collectively account for 56% of CV investors. Fund-of-funds managers represent another 16.6%.

You see private wealth? At just 2.5%? Of course, there's an asterisk: many fund-of-funds managers are themselves targeting wealth investors, so retail exposure is higher than this chart suggests.

👉 Here’s a fund with CVs on the books:

👉 And here’s your primer on CVs:

2. Vanguard buys Altruist for $4 billion

Last, but most certainly not least: Vanguard is buying Altruist for roughly $4 billion (WSJ). The price is more than 2x Altruist’s $1.9 billion valuation from April 2025. (Umm. Maybe not the value acquisition.)

Altruist is an AI-forward wealth technology and custody platform for independent financial advisors. It provides the plumbing behind an advisor’s practice: self-clearing brokerage, account opening, trading, portfolio management, billing, reporting, and all the other glamorous infrastructure that nobody thinks about until it breaks.

It competes directly with Schwab and Fidelity in the RIA custody space.

CEO Salim Ramji is pushing Vanguard beyond index funds and deeper into wealth-advice infrastructure.

Vanguard already has partnerships with Blackstone and Wellington to bring private-market products to the wealth channel.

This is my personal opinion, take it for what it’s worth, but I just can’t fathom how this product will set the world on fire:

But products are only half the equation. You also need the pipes (now you own the product and the distribution channel). Altruist gives Vanguard those pipes, and, importantly, lays them directly underneath the independent advisors.

Altruist will operate as a standalone business, retaining its leadership and brand.

Thanks for reading! As always, if you have any suggestions, reply to this email, leave a comment, or find me on socials (unhinged me on X, slightly more prim and proper me on LinkedIn). Have a great week!

-Leyla

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Here’s where you’ll find the full archive (somewhat organized):

In today’s guest post , who writes investigative research on insurance, structured credit, and private equity, provides a roadmap to the private asset categories that end up on insurance balance sheets, why they’re there, and what the labels actually mean. If you’ve followed the private credit and insurance conversation and found the terminology confusing, this is your field guide.

-Leyla

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Overview

Out of the ashes of the Savings and Loan crisis a book was published with the title – The Best Way to Rob a Bank is to Own One, by the great chronicler of the S&L crisis, William Black. I think the same can be said about today’s insurance industry.

I have published many articles focusing on insurance and the Private Equity (PE)/ Private Credit (PC) ecosystem. Those articles focused on specific insurers and/or asset types.

The goal of this article is to demystify the many ways insurance companies are exposed to the PE/PC ecosystem and to describe the growing influence of private asset managers over the insurance industry.

There are many risky asset types that insurance companies invest in. This is not new. What is new is the more aggressive push to invest in illiquid private assets originated by an affiliated PE/PC sponsor. The investment categories are many and often in the public discourse are incorrectly defined and / or conflated.

This article provides an overview of 2 trends:

1) PE ownership of insurance companies, and

2) Insurance companies increasingly investing in Private Assets.

These trends are inextricably linked. The primary goal of PE/PC and insurance tie ups are the ability to use insurance company balance sheets to absorb PE/PC originated assets, increase Assets Under Management (AUM) and perpetuate the fee generation machine.

I first focus on the broader trends and then dive into specific asset categories and risks that PE linked insurance companies are exposed to. This article doesn’t cover all risky asset classes, but rather those most connected to PE/PC sponsors. Asset classes like Commercial Mortgage-Backed Securities (CMBS) and Commercial Real Estate Mortgages, merit attention but are beyond the scope of this article.

As an example of the latter, Apollo dissolved their Commercial Mortgage REIT and “sold” $9B of its commercial mortgages to Athene at a price near 100, when the REIT was trading at a deep discount to NAV. To me, this raised questions about whether Apollo was using its insurance balance sheet to support an affiliated vehicle. This illustrates the fact that PE/PC sponsors can influence the assets of their captive insurer far beyond the private assets label.

How and why Private Asset sponsors control insurance companies

Before jumping in, it’s important to understand the flow from the PE/PC sponsor to the insurance companies. Apollo was among the first to invest in, control and scale an insurance company (Athene).

The first goal is for the sponsor to control the investment decisions at the insurance company. This can be achieved in several ways. Most straight forward is for the PE/PC sponsor to own the insurance company. Once they own the insurance company, the control is complete. Once owned, the PE/PC sponsor can appoint themselves as the Investment Manager (IM) for the insurance company. This role is generally formalized under an Investment Manager Agreement or IMA.

A PE/PC sponsor doesn’t need to have complete ownership to benefit from the above relationship. Ownership levels run the gamut from 0 to 100%. The key is to be appointed Investment Manager. Ownership gives more control, but even absent ownership, the PE/PC role as IM can achieve some of the same goals and presents similar risks.

See below for the basic flow of the relationship.

Private asset sponsors want control of insurance companies for 5 reasons: 1) the holy grail of permanent capital, 2) efficient leverage, 3) ability to commit a large balance sheet for deals that wouldn’t be possible with a traditional fund structure, 4) ability to grow Assets Under Management and therefore fees, 5) weak regulatory oversight.

Trends in Private Assets and insurance

As noted above, two trends are occurring in parallel. Growing control of insurance balance sheets by private equity or private credit sponsors and insurance companies increasingly investing in private assets.

The chart below (source: McKinsey) illustrates the explosive growth in private capital-controlled insurance companies. While McKinsey doesn’t identify the specific insurers, it’s likely that Apollo, KKR and Brookfield alone comprise 50% of the assets. Notably, I don’t believe McKinsey includes MassMutual since they own the asset manager, rather than Vice Versa (Barings) and it’s likely they wouldn’t consider Barings as a private asset manager. Adding MassMutual alone would bring the total close to $2T.

Turning to the specific assets, the chart below shows that the increase in private placements held by insurance companies closely tracks the growth shown in the above chart. It’s important to note that private placements are not the same as Private Letter Ratings (PLR) - a topic that has gained a lot of attention. While private placements often have private letter ratings, they can also have public ratings. Therefore, the categories are related, but not the same.

A late 2025 Fitch report revealed that PE affiliate insurers have 6X the exposure to private assets (as a percentage of asset) relative to non-PE affiliate insurers.^[1]

Read more

Private credit is a catch-all phrase that includes virtually all non-bank lending. Real estate private credit is one of the buckets, with its own unique wrinkles:

The vast majority of such funds file a Regulation D form, which exempts them from filing financials with the SEC and makes them totally opaque.

For a while, I wanted to do a case study on one. I just didn’t have a good candidate. Well, folks, I finally found one.

Bonus: the fund is new (less than a year old), which makes the financial statements somewhat easy to decipher (ok, ok… they are never easy, this set happens to be a little less convoluted than others).

Here’s another real estate debt case study, also full of interesting things:

Disclosure: This case study is provided for educational and informational purposes only and should not be construed as investment, legal, tax, or financial advice. The views expressed are solely those of the author. All examples are illustrative in nature and not guarantees of future outcomes. Readers should conduct their own independent research and consult with qualified professionals before making any investment or financial decisions.

What’s in the fund

As of December 31, 2025, the fund had $50.3 million in net assets across 70 positions. So, what can we learn from the financial statements? Quite a bit.

1. Start with the balance sheet

“Why do we start with the balance sheet, Leyla?” Because it’s the first statement in the annual report.
(In this case, you only have to flip through 16 pages to get there.)

And because reading financial statements is hard enough as is, so we’ll choose the path of least resistance.

A few things jump out:

1. Cost and value of investments

The fund held $52,408,408 of investments at cost and $52,449,483 at fair value (are your eyes bleeding yet?) The gap is only $41,075 in net unrealized appreciation (it’s from the RMBS sleeve, not the loans).

The loans are short-term, with a weighted-average term of 13.7 months, and are carried at par. Which brings us to a very important point for investors:

Read more

(No idea why I decided to pursue a degree in English my first go-around in college, but that’s beside the point. I came to my senses later in life, when faced with the prospect of living in abject poverty surrounded by books.)

Enough about college majors, back to math problems.

(The stock rallied 11% on the news, but that’s a separate story.)

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👉 I kid you not, today’s math problem was solved by reading the footnotes to appendixes. So read the dang financial statements (and footnotes, and appendixes, and exhibit 99.1, while you are at it)

To solve today’s math problem, we first need to identify what exactly was sold. And no, “loans” is not the right answer.

Step 1: CLO

On May 27, 2026, TCP took $535.8 million of loans on its books (TCP’s assets, not the borrowings of the fund) and packaged them into a securitization (a CLO):

• TCP sold the senior, investment-grade-style slices of the pool to outside CLO debt investors, raising $405.9 million.

• It kept Class D tranche, and the bottom slice (the “equity” or first-loss piece) for itself.

• That retained slice was worth roughly $130 million at par, against a $536 million pool.

For those not yet sufficiently caffeinated to do the math, that’s about 3x debt-to-equity leverage on that specific slice of the portfolio, layered inside a fund that was already carrying its own leverage (1.38x net debt-to-equity) at the company level.

None of this is unusual, I’m simply showing you the plumbing inside. TCP owned and consolidated the entire structure on its own balance sheet for about ten weeks before announcing the Pantheon transaction.

The first case study on this fund:

Step 2: What got sold to Pantheon and at what price

By June 30, 2026, the loan pool inside this structure (plus some additional contributed positions) was marked at $523 million. We know there is $406 million of CLO debt sitting on top of it. Add the roughly $74 million TCP separately posted to cash-collateralize the vehicle's unfunded commitments, and TCP's total equity claim comes to:

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And even within real estate credit, “secured by real estate” tells you surprisingly little about the investment you’re actually making.

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You can buy a public mREIT, commit to a drawdown debt fund, invest in an interval fund (or heck, become a hard money lender and originate whole loans directly).

The collateral behind all of the above may be real estate. But the actual assets can range from individual whole loans to slices of securitized loan pools. And importantly, the risk you’re actually taking can be radically different in each case.

Speaking of securitizations in real estate:

So, today we’re going to take a tour through this corner of private credit. We’ll look at three things:

1. The assets: what you’re actually lending against.

2. The plumbing: how the lender finances, packages, and distributes that credit.

3. The wrappers: what the investor actually owns, and how that structure changes the risk.

At the end of the article, you’ll find a list of questions to ask if you’re evaluating real estate credit.

I use “real estate credit” broadly to mean nonbank lending and credit strategies backed by real estate. This includes private loans, funds, publicly traded vehicles, and securitized credit that give investors exposure to the same underlying lending ecosystem.

The Big Picture

I hate acronyms. I really do. But I also write by the rule “Omit unnecessary words,” which necessitates a certain brevity. (Ain’t nobody got time to read a 5,000-word lending manifesto, amirite?)

So, a quick-and-dirty glossary:

• CRE = commercial real estate

• DSCR = debt service coverage ratio. Essentially, the property's cash flow relative to its debt payments (more on that here)

• QM = qualified mortgage (think a conventional 30-year mortgage that meets specific borrower and underwriting requirements.).

• MBS = mortgage-backed securities. This is when mortgages get bundled into securities, with different levels of risk and seniority assigned to them depending on where each security sits in the capital structure

• CMBS = commercial mortgage-backed securities. The “C” is for commercial.

  RMBS = residential mortgage-backed securities. The “R” is for residential.
  (I think I covered everything? 😅)

Let’s start from the top. Here are the various strategies for real estate loans:

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Every other week, we send a quick digest on what’s catching our eye in private markets.

Before we get into it, here’s the chart of the day:

Fitch’s U.S. Private Credit Default Rate hit 6.0% in April and hasn’t budged through June. But that’s not the interesting part. The interesting part is which borrowers are defaulting. Take a look at the composition:

The PCDR combines two components. The MCO universe (model-based credit opinions used to rate middle-market CLOs) is running at 4.9%. The PMR universe (privately monitored ratings used by insurers for regulatory capital) is at 9.4%.

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This shows you how unevenly stress is distributed across private credit. Smaller borrowers are breaking at a much higher rate than the bigger ones.

In 2025, issuers with EBITDA of $25 million or less defaulted at a 15.8% rate, nearly four times the 4.0% rate for borrowers above $100 million (Fitch).

In this issue:

1️⃣ Private Equity: Carlyle and Bain are the last two standing in a $7B fight for Wealth Enhancement Group. Meanwhile, Ares is in talks to buy Leonard Green.

2️⃣ Private Credit: Revolut is letting Europeans into private markets for €1. UBS told clients to sell out of a Blue Owl fund it helped build.

3️⃣ Commercial Real Estate: Blackstone Mortgage is pivoting hard out of office. KKR’s CRE lender is exploring a sale. Apollo’s mortgage REIT is dissolving entirely.

Accredited Insight delivers the LP’s perspective on private credit, private equity, and CRE, drawing on hundreds of deals reviewed, and thousands of conversations. Paid subscribers gain access to our database of over 40 case studies and articles on everything from evergreen funds to due diligence (the kind of analysis that tells you what the GP pitch deck left out).

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Private Equity

1. The $7B wealth manager auction

Carlyle and Bain Capital are the final two bidders for Wealth Enhancement Group at a valuation of roughly $7 billion including debt (FT reported it here). The platform oversees nearly $160 billion in client assets. If the deal closes, it would rank among the largest disclosed US private equity acquisitions of a wealth manager.

The strategic logic is pretty clear: buy the distribution, then sell more private markets products into it.

Carlyle CEO Harvey Schwartz has called the wealth channel a top growth priority; the firm's evergreen wealth strategies now hold $19 billion (up 4x from three years ago). Carlyle also owns a stake in Captrust and completed a $2.8 billion investment in MAI Capital in June.

Bain is following the similar trajectory: the firm owns roughly 29% of Carson Group, participated in Osaic's recapitalization, and took Envestnet private for $4.6 billion in 2024.

You can use your imagination to insert the related insurer in the graphic below. The ouroboros remains undefeated.

In a separate, but related story, Ares Management has held talks to acquire Leonard Green & Partners, according to the Financial Times. Ares manages roughly $644 billion in AUM, but only about 4% (~$25 billion) is in private equity. Leonard Green manages about $85 billion.

It’s asset gathering in action... (speaking of which, are we at all surprised?)

2️⃣ Private Credit

1. UBS pulled the plug on a Blue Owl fund it helped build

UBS helped trigger a wave of withdrawals from Blue Owl Technology Income (OTIC), a $3 billion direct lending fund distributed mainly through UBS wealth management, according to the Financial Times. Starting in late 2025, UBS advised over-allocated clients to diversify away from private credit, and investors started pulling large sums of money.

At least 60% of OTIC’s capital came from UBS clients, most of whom were based in Asia. That’s double what executives at another large private capital group said they’d want from any single distributor.

The unfortunate part for investors: it’s impossible to know whether a fund has this kind of concentrated capital base. Fund disclosures don’t tell you how much of the capital comes from a single distributor.

2. Revolut Offers €1 Private Credit / Equity / Infrastructure

Revolut announced it will offer European customers access to private markets funds from Apollo, Ares, Hamilton Lane, and Partners Group, with minimum investments of €1 through Revolut-managed ELTIF 2.0 feeders.

The timing is, let’s call it, interesting.

Apollo and Ares are among the managers that have restricted redemptions on other vehicles. Partners Group capped withdrawals from a major evergreen buyout fund last month (Bloomberg). And now Revolut (75 million users, no platform commissions) is opening the gates to private markets. €1 buys you a key.

Revolut emphasized that these funds are designed for investors with a “multiyear horizon” and said its in-house team screened managers for their redemption-management track records.

As Revolut’s head of wealth and trading put it: “If a fund manager was not able to show a history that they were able to manage the redemption requirements, that manager was not considered.”

3️⃣ Commercial Real Estate

Three CRE lenders, three outcomes: reposition, sell, dissolve.

If you want a snapshot of where commercial real estate lending stands in mid-2026, look at what three major mortgage REITs did this summer.

1. Blackstone Mortgage Trust (BXMT)

BXMT reported a net loss of $81.2 million ($0.48 per share) for Q2 2026, compared with net income of $7 million in Q2 2025. The CECL reserve (the provision for expected credit losses) jumped to $398 million, up from $284 million at year-end 2025, with asset-specific reserves on nine impaired loans.

But the story here is repositioning. BXMT received $1.2 billion in loan repayments during the quarter and reinvested $1.4 billion into new opportunities, including residential, industrial, and a new single-family homebuilder finance vertical. The company is actively rotating out of legacy office exposure into other sectors.

2. KKR Real Estate Finance Trust (KREF)

KREF is taking a different route. The publicly traded CRE lender is considering strategic alternatives that could include a merger, sale, or asset sale. Its board established a committee to review the options, according to Bloomberg.

KREF’s Q2 net loss nearly doubled from the prior quarter as it increased provisions for credit losses. Shares have dropped 65% over the past five years. CEO Matt Salem said the company has “made substantial progress repositioning the portfolio,” but the strategic review is open-ended with no timetable or guarantee of a transaction.

3. Apollo Commercial Real Estate Finance (ARI)

This is June news, but worth resurfacing. After selling its $9 billion loan portfolio to Athene in April at 99.7 cents on the dollar, ARI’s board determined that dissolution, liquidation, and winding down the business is “advisable and in the best interest of stockholders”. (Reuters)

Stay tuned, I’m working on a couple of case studies of evergreen real estate funds.

Thanks for reading! As always, if you have any suggestions, reply to this email, leave a comment, or hit me up on socials (unhinged me on X, slightly more filtered me on LinkedIn). Have a great week!

-Leyla

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P.S. New here?

Here’s where you’ll find the full archive (somewhat organized):

Not due to lack of funds to cover (there are plenty), but because each one takes considerable time and effort. Like all unhappy families in Tolstoy’s Anna Karenina, every fund is different, and thus impossible to fully streamline.

This week, I'm making an exception. The minute I read the announcement, I knew I'd be clearing my calendar to write about it.

Before we get into the details, a disclosure: of all financial organizations, Vanguard is probably the one I’m most loyal to. I’ve been a happy customer for over two decades.

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Fun fact: many moons ago, bright-eyed and bushy-tailed, I called Vanguard’s 1-800 number before opening my very first IRA with income from my first job. As part of my extremely sophisticated due diligence process, I asked the representative: “What happens to my money if Vanguard goes bankrupt?” I’m sure she got a good chuckle out of that one.

Over the years, I've had nothing but excellent experiences with the company and the people who work there. Which is why it took me about 24 hours (and a screaming pillow) to get into the right mind to write this piece in a neutral way.

Anywho, I’ll present you with the facts first, and reserve my opinion until the very end.

Important disclosure. This case study is independent analysis published for educational purposes only and does not constitute investment advice, a recommendation, or a solicitation to buy or sell any security. All information is sourced from the fund's prospectus (dated June 30, 2026), the prospectus supplement (dated July 21, 2026), the Statement of Additional Information, SEC filings, and publicly available company materials. Return estimates are hypothetical and for illustrative purposes only — they are not projections or guarantees. The author has no position in the WVB All Markets Fund and no business relationship with Wellington Management, Blackstone, or Vanguard.

A good time to resurrect this great post (you’ll see why in a minute):

What WVB Got Right

Let’s start with what this fund gets right.

1. Access

Deep in my heart, I believe that a bigger menu of investment options is good for investors. With the right guardrails in place (things like, you know, hefty penalties for fraud), and good disclosure (being able to see what’s inside funds and how much it costs to invest, for example), there is no reason to gatekeep anything from any class of investors. If you can place Fed rate bets on Kalshi, why shouldn’t you be able to access private equity funds?

On the access front, this fund delivers.

Investors get institutional-quality public/private asset allocation in a single ticker, with daily subscriptions, 1099 tax reporting, a $2,500 minimum, and a headline management fee of just 0.10%.

Which brings us to the second good point.

2. Fees

The very Vanguard-esque 0.10% is what the fund leads with. Bogleheads rejoice? Not so fast. This is a fund-of-funds, and the underlying fund fees are a thing to behold.

Before we get into the fee structure, let me give you a question to ponder:

Why are they doing it?

👉 The real business here is the asset gathering. I wrote about it just a few days ago:

Wellington earns advisory fees (their bread and butter). Vanguard gets another flagship product to keep assets inside its ecosystem (new wrapper for their existing products). Blackstone gets access to one of the largest retail distribution channels in the world (and gets to collect management fees of 1-1.25% plus carry of 10-15% on the underlying funds).

The prospectus requires that at least 20% of assets be invested in Blackstone funds and at least 20% in Vanguard funds (measured at the time of investment). That effectively creates a permanent pipeline of capital into each partner's products.

And here are two deep dives on the Blackstone funds:

And a fun side note on BREIT:

The Fee Stack

From the prospectus:

The 0.10% management fee is waived for three years (with no clawback). So the advisory fee is effectively zero until ~2029. And the 2.56% in "Other Expenses" is a launch-phase number based on an estimated $100M in assets; it should compress as the fund scales.

IMPORTANT:

The 0.68% in underlying fund fees (the “Acquired Fund Fees and Expenses”, or AFFE) covers the operating costs of the Blackstone and Vanguard funds inside this vehicle. What it does not include, per the prospectus itself, are “performance-based fees or allocations calculated solely on the realization and/or distribution of gains.”

Translation: Blackstone’s carry (which runs 10–15% of net profits) is not in the expense ratio.

Note that expense limitation agreement (the thing keeping “Other Expenses” from eating you alive) is renewable annually but not guaranteed. It also lets Wellington recapture absorbed expenses within 36 months.

Now. All of that said. I’ve said this before and I’ll say it again: don’t get too hung up on fees if your returns compensate you for them.

So let’s look at that.

What Do You Get for All Those Fees?

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Six months of new filings are now in, so time for a vibe check an update on where the fund stands: how much capital came in, how the fund’s leverage picture changed, and what the earnings underneath the distributions actually look like.

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Here’s the post from December (which feels like a lifetime ago)

Disclosure: This case study is provided for educational and informational purposes only and should not be construed as investment, legal, tax, or financial advice. The views expressed are solely those of the author. All examples are illustrative in nature and not guarantees of future outcomes. Readers should conduct their own independent research and consult with qualified professionals before making any investment or financial decisions. All figures below are from CELFX's SEC filings, in six-month increments ending each March 31 and September 30. Gain/loss figures are shown net and after-tax.

👉 No idea what an interval fund is? Lucky you (j/k)!
Start here:

And then read this:

What Hasn’t Changed

Something of note: many of the underlying funds are not registered under the 1940 Act (unlike CELFX itself), which has two implications:

1. They likely rely on Section 3(c)(1) (fewer than 100 beneficial owners) or Section 3(c)(7) (qualified purchasers only) exclusions. Translation: most mere mortals are not wealthy or connected enough to invest in them directly.
   CELFX, meanwhile, dropped the accredited investor self-certification requirement in its latest prospectus supplement. Regulatory arbitrage, if you will.

2. The underlying funds are not subject to the 1940 Act’s leverage limits. This means their borrowing is constrained only by LP agreements and lender appetite. More on leverage in a minute.

Assets Keep Growing

Net assets have grown in every reporting period. Most recently, from roughly $5.36B (3/31/25) to $7.82B a year later (~46% in twelve months), but the growth is slowing down:

Why is it slowing down?

Capital inflows are reversing, that’s why.

👉 Say it with me one more time:

Capital Flows

The growth is driven by new subscriptions, which (for now?) continue to run ahead of redemptions. Measured against net assets at the start of each period, sales have remained robust. That’s the good news.

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That’s when fund managers stopped hunting returns and started farming assets.

The hunter’s model was simple: 2% management fees kept the lights on. 20% carried interest made you rich. Funds were small, and GPs ate what they killed.

Then the industry discovered agriculture.

Why spend your life chasing unpredictable carry when you can cultivate an ever-growing field of fee-paying capital? Carry once made fortunes. Today, fortunes are made from recurring management fees.

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The strongest evidence that gathering won? Management fees fell. It sounds backwards, but I’ll explain.

Case in point: when Bridgepoint agreed to pay $1.4 billion for Kayne Anderson Real Estate this summer, it bought 100% of the fee-related earnings, and just 15% of the carry in historic funds:

Falling Rates, Fatter Harvest

Buyout funds raised in 2025 charged an average management fee of 1.61% (the lowest ever recorded). It’s been a steady 15-year slide (with a brief reversion during the 2020 fundraising boom):

Victory for LPs? Maybe.

Preqin argues the biggest driver is simply fund size. Nearly half of all capital raised in 2025 flowed to the ten largest buyout funds (up from 34.5% in 2024). There are economies of scale in managing larger funds.

But decreasing fee rates do not mean asset managers are earning fewer dollars. Look at the math:

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That's what reading CIM Real Assets & Credit Fund's schedule of investments felt like.

Most interval funds own one thing. Private credit funds own loans. Real estate funds own buildings. Infrastructure funds own… I dunno, some cables. RACR apparently looked at that concept and said, “Why choose?”

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The fund is not big by institutional standards ($237.7M in net assets), but it comes with a lot of different things in one small package. The portfolio is:

• part direct real estate,

• part commercial mortgage bonds,

• part CLO debt,

• part CLO equity,

• part leveraged loans, sprinkled with common stocks for good measure,

and held in piece with derivatives and financing agreements. Plus unitranche loans and, of course, some PIK. (I am not kidding)

Anywho, lack of diversification is not this fund’s problem.

The problem is that nearly every major asset class in the portfolio is financed with leverage, derivatives, or repos, yet shareholders have earned remarkably little for taking on all that complexity.

🔎 It is my hope that today’s case study inspires you to start looking at the schedule of investments. Closely. And reading the fine print on how things are financed. Also closely.

If I haven’t yet turned you into someone who compulsively reads schedules of investments and footnotes, I’m clearly not doing my job (or you are new here).

Disclosure: This case study is provided for educational and informational purposes only and should not be construed as investment, legal, tax, or financial advice. The views expressed are solely those of the author. All examples are illustrative in nature and not guarantees of future outcomes. Readers should conduct their own independent research and consult with qualified professionals before making any investment or financial decisions.

What’s in the fund

As of March 31, 2026:

• Cost of investments: ~$350 million.

• Current fair value: ~$314 million.

In other words: the fund is sitting on approximately $36 million of unrealized losses (or 10.3% of cost):

Now let’s look at the more interesting thing: what’s inside and how it’s financed

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Every other week, we send a quick digest on what’s catching our eye across private markets.

Today’s lineup:

1️⃣ Private equity: valuations vs exits
2️⃣ Private credit: retail wants out, institutions want more
3️⃣ Commercial real estate: data centers
🎁 Bonus: a report on evergreens and secondaries

1️⃣ Private Equity

Chart of the week, right here:

You are looking at buyout valuation multiples (the multiple of EBITDA private equity sponsors pay to acquire a business). The multiples are near the 2021 record high. What has happened since 2021? Rates have gone up substantially, which makes leveraged buyouts more expensive to buy. And yet, entry multiples keep climbing.

The other side of the ledger tells a different story: more than 16,000 companies globally have now been held for over four years (also a record!) That’s 52% of all buyout inventory.

Exits were up by volume in 2025, but largely due to gigantic IPOs. Smaller portfolio companies are being held on to and maturing like … (A. fine wine; B. milk?)

2️⃣ Private Credit

1. Institutions are doubling down

While retail clients head for the exits (here’s a great article on the subject of redemption queues and how the math works), institutions are doubling down. North American direct lending funds raised ~$16B in Q2 (the second-strongest quarter in four years).

What’s attracting investors? Wider spreads, tighter docs, and higher rates. Keep in mind, most of this capital was committed to drawdown funds, meaning it won’t deploy immediately. How much of the sales pitch centered on expected distress, folks?

2. On investor concentration

Speaking of retail investors heading for the exits, in late 2025, UBS advised clients to reduce private credit exposure. Turns out, 60% of Blue Owl Technology Income Corp. (OTIC) had reportedly been raised through UBS clients (FT).

When a single distributor represents that much of your investor base, a change in allocation guidance turns into a redemption problem.

Guess what? As an outside investor, you usually have no way of knowing how concentrated a fund's distribution channels really are. Something to ponder for your next allocation…

3️⃣ Commercial Real Estate

Data centres are the new darlings (“Duh, Leyla”)

Data center deal volumes surged 37% in 2025 (McKinsey). It is now the fastest-growing segment globally. The capex story is massive: $3T in infrastructure needed by 2030, 100 GW of new capacity, $1.2T in real estate value creation.

The constraint is power. Sites that can deliver 300+ MW in under 36 months now outrank pure connectivity plays. As a side note, regulatory and community delays have killed $64B in US projects since 2023.

I’m not nearly smart enough to call the top in data centers, but here’s what happened to a fund that bought a bunch of CRE at the peak:

Secondaries

Meketa's latest paper on secondaries highlights many issues we've flagged: NAV-squeezing, inflow-driven returns, and evergreen fund misuse of secondaries as a liquidity crutch.

Interesting chart from the paper: in H1 2025, over 20% of secondaries volume was vintage 2015 and older. Stale assets, trading at a discount, being stored in fresh vehicles.

Thanks for reading! As always, if you have any suggestions, reply to this email, leave a comment, or find me on socials (unhinged me on X, slightly more filtered me on LinkedIn)
-Leyla

P.S. New here?

Here’s where you’ll find the full archive (somewhat organized):

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That’s what makes this case study by so interesting.

Bridgepoint’s acquisition of Kayne Anderson Real Estate offers a rare window into how alternative asset managers are valued, what buyers are actually paying for, and why recurring management fees can be worth far more than carried interest. This is an inside look into alignment, fundraising, operating leverage, and what it takes to build a platform that’s valuable beyond the underlying real estate.

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👉 Browse our full library of commercial real estate analysis, deep dives, and case studies here (link). And here’s a recent fund write up:

About the author

CRE Analyst is the research brand behind FastTrack, the commercial real estate training program now in its seventh year with 2,000+ alumni. Founded by an institutional fund manager and a regional developer, it draws on 35 years of commercial real estate experience across acquisitions, development, asset management, research, and fund management. Reach CRE Analyst at admin@creanalyst.com, or on LinkedIn.

Al Rabil started Kayne Anderson Real Estate from scratch in 2007 and built it into an emerging juggernaut. He and David Selznick built a cash machine, and it shows off everything that makes real estate investment platforms attractive:

• Differentiation. Run out of Boca Raton, Kayne made its name in medical office, senior housing, and student housing. A different path than the coastal office crowd.

• Growth. The first fund raised $136 million. The latest, KAREP VII, closed at $5.12 billion in May 2026, oversubscribed against a $3 billion target and 86% larger than the fund before it.

• Big margins. EBITDA margins run around 50-60% today, on a path to 65-70%.

Five weeks after that record close, Kayne sold. In an uncertain market, Rabil and Selznick had two options:

• Option 1: Clip ~$100 million a year in profits as a medium-sized platform, let a billion-dollar net worth ride on the paper value of the firm, and pray for continued outperformance.

• Option 2: Take a $759 million cash payday today, clip strong comp going forward, potentially earn another ~$344 million in earnouts, and still pray for continued outperformance.

They chose Option 2.

This article explains why they, unlike most real estate investment managers, had the ability to sell at a big number, and what the sale means for the rest of the space. This deal is more complicated (and more interesting) than the headlines suggest, with buried signals for every other investment manager.

Inside the Kayne fee machine

If you were building a real estate investment manager, what would you rather have: a big perpetual fund or a series of closed-end funds? Kayne Real Estate has both.

Kayne Anderson Core Fund (KACORE)

KACORE is Kayne Anderson Real Estate’s ~$4 billion open-end, perpetual core fund, launched in 2017. It owns stabilized, income-producing real estate in Kayne’s specialist sectors, medical office, senior and student housing, and storage, with room to put up to roughly 10% of capital into development and value-add. The fund targets a 9–10% net total return, with about 4–6% of that coming from income.

Structurally, it’s an evergreen, NAV-based vehicle: no fixed fund life, capital comes in and out through a contribution and redemption queue, and it runs around 34% leverage. In short, it’s the stabilized, permanent-capital way to own Kayne’s demographic-driven sectors, built for steady income rather than opportunistic upside.

At KACORE’s fee schedule (see below from a pension fund pitch), $5 billion in net assets generates $40-60 million of fees. $10 billion in net assets generates $80-120 million. And $20 billion in net assets generates $170-230 million.

From a platform perspective, this is the beauty of a lower-intensity, open-end vehicle: scaled operating costs. If it takes 5 people to run a $5 billion core fund, how many people does it take to run a $10-20 billion fund? 10? Even at $1-2 million each, operating profit scales substantially. …which helps to explain why platforms love the idea of these open-end vehicles (a topic for another post).

No doubt that KACORE was a desired component of the platform and, if it continues to outperform, could drive meaningful margins in the future.

Kayne Anderson Real Estate Partners (KAREP)

The star of the Kayne Anderson show is KAREP, Kayne’s flagship closed-end, value-add and opportunistic equity series, which launched in 2007 and is now on its seventh fund. Where the core fund owns stabilized assets for income, KAREP goes for appreciation: it acquires, develops, and repositions real estate in Kayne’s specialist sectors, medical office, senior housing, student housing, multifamily, and light industrial, then sells at a profit. It targets a 15-18% net return (18-21% gross), typically using 65–70% leverage over a roughly five-year hold.

Structurally, it’s a drawdown fund with a finite life: investors commit capital, it gets called and invested over a commitment period, and the fund harvests and winds down over about 8–10 years.

It charges a base fee of 1.25%–1.75% on committed capital (1.75% early, stepping down), an 8% preferred return, and a 20% carried interest. The record behind it is the reason it keeps growing: a 15% realized net IRR since inception and mostly top-quartile results across a 19-year track record.

Here’s what Bridgepoint flagged in its Kayne acquisition announcement:

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So what happened?

Let’s pop the hood and see if we can reverse-engineer the answer.

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Here’s what we’ll cover today:

• Compare the portfolios

• Compare the balance sheets

• Compare income quality

Here’s another Blue Owl fund:

Disclosure: This case study is provided for educational and informational purposes only and should not be construed as investment, legal, tax, or financial advice. The views expressed are solely those of the author. All examples are illustrative in nature and not guarantees of future outcomes. Readers should conduct their own independent research and consult with qualified professionals before making any investment or financial decisions.

It’s probably not the loan book

👨🏻‍🔬 Remember your high school science class (tbh, I blocked mine out, but maybe you were less traumatized)? You start with the simplest hypothesis and try to disprove it. In this case, the obvious explanation is that one fund simply owns worse loans.

Whelp, based on publicly available information, that doesn’t appear to be the case:

If you stopped your diligence here, you’d probably conclude these funds should behave similarly under stress. Many of the portfolio metrics are remarkably close.

Even software exposure (the one thing everyone is panicking about right now) isn’t nearly as different as the headlines suggest. Oaktree actually discloses more software exposure: 18% vs 14% in OCIC (more on that later).

I was apparently single-handedly responsible for datacenter demand on July 4th (the day I’m writing this), because I compared the holdings of both funds for your enjoyment.

Both funds even own the same problem child: Pluralsight. (That one's still lingering on the books. I should probably do another write-up) - I first wrote about it here, then here:

Even fundraising tells the same story. The two funds expanded almost in lockstep through Q4 2025:

If this were only about the loans, we’d probably stop here. But that’s where the story gets interesting:

Read more

That post told you what to look for. This one tells you what goes wrong.

Romain is back with five mistakes GPs make on operational value creation. These mistakes are often not caught until the marks deteriorate. But fear not, dear reader, Romain provides concrete takeaways on how to catch such mistakes earlier.

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About the author

Romain is a managing director at GP-Score, which he co founded with a retired LP and two former seasoned buyout executives.

He brings 25 years of operational experience, both as a performance improvement consultant for portfolio companies (AT Kearney, Alvarez&Marsal, FTI, and others) and as a Comex member in a PE-backed SaaS group. His functional area of expertise is B-to-B Sales and Marketing. You can email him at romain@gp-score.com, or find him on LinkedIn.

Invest in private equity? Start here:

Let’s start with this: a GP who never makes mistakes is a GP who isn’t trying hard enough to improve the EBITDA of its portfolio companies. So mistakes are fine as long as you don’t repeat them and you actually learn something. I have picked out a handful of mistakes we have seen over the years. Beyond the obvious ones, I focused on five that aren’t necessarily easy for LPs to spot.

1. Too much confidence in sector knowledge or playbooks

How many times have we heard PE managers say “We’re sector experts, that lets us move faster and do better, it’s an edge over competitors” or “We have a great playbook for our portfolio companies in the [ ] sector”?

Unfortunately, sector expertise is a dangerous asset. It tends to blind the expert, convince them they already know enough, and hide what they actually don’t know. Case in point: did Thoma Bravo’s software expertise stop them from losing five billion on Medallia?

Operational value creation is a craft, not an industrial, standardized process. Sure, knowing a sector is never useless, whether it’s SaaS or medtech, but every portfolio company is different: different context, different market, different management, and the potential levers for action are so numerous that the GP really needs to take the time for a proper, thorough diagnostic.

The inconvenient truth is, an outside consultant is often sharper than an in-house “expert,” whose knowledge erodes fast and stays anchored to what they learned at four or five companies, while the consultant will have seen far more situations.

What should LPs take away?

Read more

Every other week, we send a quick digest on what’s catching our eye across private markets.

Before we get into it, chart of the day:

The chart shows you the evolution of PIK usage as the cycle progressed. Total PIK usage is up since 2021, but what's more interesting is "bad PIK" rising as a proportion of PIK loans. This, folks, is mostly distressed borrowers kicking the can. In theory, when more borrowers become distressed, markdowns should follow.

In Q1 2026, we saw the other shoe drop: broad-scale markdowns across the traded and non-traded BDC universe. If you missed that post, you'll find it here.

Accredited Insight delivers the LP’s perspective on private credit, private equity, and CRE, drawing on hundreds of deals, and thousands of conversations. Paid subscribers gain access to our database of over 40 case studies and articles on everything from evergreen funds to due diligence (the kind of analysis that tells you what the GP pitch deck left out).

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Today’s lineup:

1️⃣ Private equity is living its version of Groundhog day
2️⃣ Private credit: redemptions are up (but not for all funds)
3️⃣ Commercial real estate: cap rates are stabilizing (two cheers for that!)

Private Equity

1. Groundhog Day

Private equity entered 2026 feeling surprisingly optimistic: tariff fears had faded, the IPO window looked cracked open, deal activity was picking up. For a brief moment, it seemed like the industry might finally escape the liquidity drought that has defined the last three years.

Then came “SaaSpocalypse”, redemption stress across private credit, and a war.

Bid-ask spreads widened and exit momentum stalled yet again. PwC data shows H1 deal volume down 34% year-over-year while total deal value rose nearly 10%. In other words, fewer deals are getting done, but the ones that do happen are attracting a disproportionate share of capital.

Bain calls this the Groundhog Day scenario: another year where recovery is always six months away.

The math became harder: a decade ago, a buyout deal could generate a 2.5x return with roughly 5% annual EBITDA growth. Leverage was cheap, entry multiple were reasonable, and multiple expansion did a lot of lifting.

Today, with entry multiples for larger buyouts running around 11–12x EBITDA and debt costs at 8–9%, that same 2.5x outcome requires closer to 10–12% annual EBITDA growth. Bain's shorthand: "12 is the new 5."

Tech was hit particularly hard. Deal value in the sector fell roughly 70% from Q4 2025 to Q1 2026. Private equity software portfolios also took marks lower, though nowhere near the public market bloodbath. Most reported declines were in the high-single-digit range.

Side note: I recently joined the Hedgeye podcast to discuss private markets, and the conversation touched on what made PE and the Swensen model so successful back in the day, give it a listen :)

Listen to Hedgeye Podcast

☝️I wrote this a year ago, my opinion has not changed.

2. Fundraising

Global private capital fundraising is on pace for roughly $1.3 trillion in 2026, the weakest year since 2016. Buyout’s share of total fundraising is hovering near multi-year lows.

The problem is simple: exits haven’t recovered. Bain estimates it takes 12-18 months of sustained exit activity before fundraising meaningfully improves.

3. What Institutional LPs Think

From the latest ILPA survey:

• 47% of LPs expect to reduce exposure to large-cap PE managers over the next 12 months

• ‼️ 84% are less likely to invest with managers that raise significant amounts of retail capital

• Only 21% view continuation vehicles as a preferred source of liquidity (no surprises here)

CVs are a fun topic. Here’s your primer:

And they are starting to show up in evergreen funds:

Private Credit

1. Redemptions Are Up

Q2 redemption data is coming in, and the queue isn’t getting shorter:

• Apollo Debt Solutions capped withdrawals at 5% after investors requested redemptions equal to 16.8% of NAV, up from 11.2% in Q1.

• Morgan Stanley’s North Haven Private Income Fund saw redemption requests reach 11.6% of NAV and fulfilled just 43% of them.

• Ares Strategic Income Fund said it had received redemption requests worth 14.4% of the vehicle (up from 11.6% in Q1). The list goes on…

The notable exception was Oaktree Strategic Credit Fund, which reported redemption demand of just 4.5% and honored all requests in full.

None of this should come as a surprise, of course: there is no penalty for requesting a redemption, and for advisers, it’s a classic prisoner’s dilemma with only one rational solution:

What's more concerning is the portfolio markdowns. When a fund marks assets down, NAV per share drops. Lower returns beget more redemption requests. I don't expect redemptions to slow materially in Q3, but time will tell.

2. The Obvious Trade

Mainstream media is catching on to the most obvious trade under the sun: listed BDCs currently trade at a median discount to NAV of roughly 25%, arguably reflecting concerns that private credit valuations have further to fall. Meanwhile, many non-traded vehicles continue to offer liquidity at stated NAV (Bloomberg).

The trade is straightforward in theory: redeem from the non-traded vehicle at NAV and rotate into the publicly traded equivalent at a substantial discount. The only trouble is, the article is about six months late.

I wrote about this back in October (hehe):

The catch, of course, is that “redeem at NAV” only works if you can actually redeem. If your request is prorated to 43% this quarter, the trade may take considerably longer to execute.
(Yes, there are meaningful differences in fees, leverage, and portfolio construction between listed and non-traded vehicles, but not meaningful enough to ignore the obvious)

3. Insurance and Private Credit

Away from the redemption headlines, a new report from Clearwater Analytics highlighted a less obvious risk lurking in insurance company portfolios.

Median allocations to private credit among U.S. life insurers have more than doubled since 2021, reaching roughly 9% of total assets.

More interesting was Clearwater’s finding that an estimated 10-20% of insurers with LP stakes in private credit funds also hold debt issued by those same funds. In other words, they’re investing in the fund and lending to the fund at the same time (“cross-contamination” is what Clearwater calls it). WSJ’s article on the subject is here.

3️⃣ Commercial Real Estate

From Yardi’s latest data:

• Multifamily remains oversupplied. National rents posted modest growth in the first half of 2026, but nearly 1.3 million units remain in lease-up.

• The recovery is highly market-dependent. Gateway cities and lower-cost Midwest markets are outperforming, while many Sun Belt markets are still digesting a wave of recent deliveries.

• Supply relief is coming, but slowly. New apartment starts fell more than one-third from their 2022 peak, yet developers are still expected to deliver roughly 450,000 units annually through 2027, extending the supply overhang.

• Debt markets are open. Fannie Mae, Freddie Mac, banks, insurance companies, debt funds, and CMBS lenders are all actively lending.

• The bottleneck is pricing. There is plenty of debt capital available, but not enough sellers willing to transact at current market-clearing prices.

Last (but not least): CBRE cap rate survey

Cap rates are stabilizing, total CRE transaction volume was up 19% in 2025, and nearly all respondents believe that cap rates have peaked (you’ll find data on cap rates for other asset classes and geographic locations here)

If you invest in real estate deals or funds, you’ll find this helpful:

And finally, this SEC panel on the retailization of alternatives is worth a listen (discussion starts around 22:00). (you should subscribe to his newsletter), Jason Zweig (whose column you undoubtedly read), Stephen Deane, Joseph Sheirer, and Kevin Gannon discuss whether retail investors truly understand the risks, liquidity constraints, and valuation challenges associated with semi-liquid private market investments.

Thanks for reading! As always, if you have any suggestions, reply to this email, leave a comment, or hit me up on socials (unhinged me on X, slightly more filtered me on LinkedIn). Have a great week!

-Leyla

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P.S. New here?

Here’s where you’ll find the full archive (somewhat organized):

P.P.S. Meme of the day

Public BDCs took a 3.3% NAV hit, according to Raymond James. Public markets did not welcome the news with open arms: BIZD, VanEck’s BDC ETF, is down 4.6% since March 31.

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Today, I wanted to take a look at the performance of large non-traded funds. I pulled data on the seven non-traded private credit evergreen funds, and the markdowns ranged from roughly -1.6% to -4.2% of beginning NAV.

These markdowns occurred across different managers, different underwriting teams, different sectors, and different borrower bases. And, like synchronized swimmers, all of them moved in the same direction at the same time:

For eight consecutive quarters in our sample, unrealized gains and losses fluctuated within a relatively narrow band. Then Q1 2026 arrived. It seems the industry reached the same conclusion simultaneously, and valuations were adjusted.

➡️ There are some in-the-weeds accounting mechanics you really need to understand about how defaults flow through financial statements. Read this:

But Why Q1 2026?

The obvious question is why these markdowns happened in Q1 2026 rather than Q3 2025 or Q4 2025. After all, most of the underlying stress wasn’t new:

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For years, it behaved like one: assets grew at a 46% CAGR, and the fund went on to become one of the largest private credit vehicles available to ordinary investors. It consumed capital the way my teenagers consume groceries (and other resources): continuously, and without remorse.

I ended that piece with a question: is the machine still eating, or is the planet starting to eat back?

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The annual report is out, and the May repurchase results are in. TL;DR, friends: the planet is eating back.

Here’s the first part of the series:

Here’s what we’ll cover in today’s update:

• Redemption activity

• What’s contributing to the decline in NAV per share

• What’s happening with the portfolio

Let’s get into it. (Pour the coffee. You’ll want it.)

Disclosure: This case study is provided for educational and informational purposes only and should not be construed as investment, legal, tax, or financial advice. The views expressed are solely those of the author. All examples are illustrative in nature and not guarantees of future outcomes. Readers should conduct their own independent research and consult with qualified professionals before making any investment or financial decisions.

The Buyers Left

When I last wrote about CCLFX, the headline was a single oversubscribed repurchase offer. Investors asked to pull ~14% of the fund. Cliffwater honored about 50% of those requests. At the time, it wasn’t clear whether that was a one-quarter panic or the start of a trend. (Spoiler: it was a trend).

We now have more data points. Here’s every repurchase offer since the start of 2024:

Look at what the fund did with its gate as the pressure built. In March, it went all the way to the 7% ceiling (the maximum it can repurchase before it’s legally required to prorate). In May, with more people asking to leave, it pulled the cap back down to 5%.

But redemptions are only half the demand story. The other half is what the people who stayed decided to do with their money:

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