Key facts
- Private markets sector executives noted weaker incomes and challenges in raising capital at an annual conference in Berlin.
- Bain & Co reported that private equity is experiencing a prolonged 'liquidity crunch'.
- Companies are being held in private equity portfolios for an average of seven years, beyond the traditional three to five years.
- The backlog of unsold companies in private equity portfolios has grown to approximately 33,000.
- Median dividend coverage for 46 U.S.-listed business development companies (BDCs) fell to 0.99 times in the first quarter of 2026.
- A $25 billion BlackRock private credit fund received redemption requests totaling 13.3% of its assets in the first quarter.
Executives from the private markets sector convened at their largest annual conference in Berlin, where discussions centered on significant funding stress and a prolonged 'liquidity crunch' impacting private equity. Senior figures noted a slowdown in capital inflows and a retrenchment from investors, who are increasingly prioritizing fewer, larger relationships and demanding evidence of capital returns before committing further.
Bain & Company's analysis revealed that private equity firms are holding onto assets for an extended period, averaging seven years, well beyond the traditional three to five years. This extended holding period contributes to a backlog of approximately 33,000 unsold companies. The consultancy attributed this situation to a confluence of factors, including declining software valuations, geopolitical uncertainty stemming from the Iran war, and broader stress within private credit markets, all of which are dampening dealmaking, fundraising, and exit opportunities.
Further evidence of strain comes from U.S.-listed private-credit lenders, where regulatory filings indicate that dividend payouts are increasingly reliant on thinner cash cushions than headline earnings might suggest. In the first quarter of 2026, median dividend coverage across 46 business development companies (BDCs) dipped to 0.99 times, meaning net investment income no longer fully covered regular and supplemental payouts. This figure falls to 0.89 times when excluding payment-in-kind interest, which allows borrowers to defer interest payments.
The trend of redemptions continued into the second quarter. BlackRock reported that its $25 billion private credit fund faced requests to redeem 13.3% of its assets in the first quarter, ultimately buying back 5%. Market participants are closely watching redemption windows at U.S. non-traded BDCs, which began closing last month. A survey by J.P. Morgan analyst Kabir Caprihan indicated that roughly 85% of investors anticipate total second-quarter redemption requests across these U.S. non-traded BDCs will exceed those of the first quarter.