The Private Asset Liquidity Gap

Distributions Have Collapsed

Distributions, the cash that flows back to LPs when companies are sold, averaged 29% of starting NAV per year through 2019. The last three calendar years have run at 11 to 13%, the lowest on record outside the 2020 shock.

Source: Bain Global Private Equity Report 2026, Figure 19. Buyout distributions as a share of starting NAV.

Part 2: The DPI Drought Downstream

DPI, distributions to paid in capital, measures how much cash a fund has returned against what LPs put in. Every buyout vintage since 2017 is tracking below its historical benchmark. The 2021 vintage has returned 0.13x of called capital, against a historical benchmark near 0.35x. Five consecutive vintages are underwater on cash returns.

Source: Bain Global Private Equity Report 2026, Figure 20. Median DPI by vintage at five years for US and Western Europe buyout, with historical benchmark line at the average of median DPI for 2010 to 2017 vintages.

The downstream effect lands on LPs. The Bain LP survey work, drawn from PEI and ILPA panels, puts 53% of LPs as constrained from new commitments because past commitments have not returned capital. Two thirds prefer to wait for liquidity rather than sell at a discount. Capital is stuck and the appetite to recycle is structurally lower than three years ago.

Source: Bain Global Private Equity Report 2026, Figures 21 and 26. LP commitment and behavior data drawn from ILPA and PEI surveys.

Part 3: How LPs and GPs Are Coping

Three relief valves have absorbed the pressure. Secondaries let an LP sell an existing fund interest. Continuation vehicles let a GP roll a portfolio company into a new vehicle with fresh investors. NAV finance lets a GP borrow against the unrealized portfolio to fund distributions or new investments. Fundraising data shows where capital is voting.

Source: Bain Global Private Equity Report 2026, Figure 23. Secondaries up 11% year over year, direct lending down 28%.

Secondaries

A secondary sale is one LP selling their fund interest to another investor at a price reflecting current market discount. Ardian closed ASF IX at $30 billion in early 2025, the largest single secondaries vehicle on record. The product has matured from a distressed channel to a default tool for portfolio management. Buyout LP interests traded at 92 to 94 cents on the dollar in 2024 to H1 2025, down from par in 2021 and as low as 81 cents in 2022.

Source: Ardian press release on ASF IX final close; Jefferies Global Secondary Market Review for pricing.

Continuation Vehicles

A continuation vehicle moves one or more portfolio companies out of an aging fund into a new vehicle, often with the same GP. Original LPs choose to roll their stake or cash out, and new capital underwrites the next hold period. The product has grown fast enough that ILPA published standardized disclosure templates in 2023 to 2024 to address conflict of interest and fee transparency questions.

Source: ILPA Continuation Funds Guidance, 2023 to 2024 disclosure templates.

NAV Finance

A NAV loan is a credit facility extended to a fund or to an LP secured by the net asset value of the underlying portfolio. The borrower draws cash without selling assets and repays out of future distributions. 17Capital closed Credit Fund 2 in February 2025 at $7.5 billion, the largest dedicated NAV loan vehicle to date. Their published outlook projects the addressable market to reach $700 billion by 2030 against current outstanding under $150 billion.

Source: 17Capital press release on Credit Fund 2 final close; 17Capital published NAV finance market outlook.

Sources: Secondaries volume per Jefferies and Greenhill 2024 reviews. NAV finance current estimate from 17Capital and Rede Partners. 2030 projection from 17Capital published outlook.

Sources: Jefferies H1 2025 Global Secondary Market Review; ILPA Continuation Funds Guidance; 17Capital and Macfarlanes on NAV facility pricing and advance rates.

Part 4: The Bear Case

The relief valves work for now. They add structural risks that did not exist five years ago. The pattern across 2023 to 2026 reporting from LP advisors, rating agencies, ILPA, and the banks themselves is consistent: the structures are scaling and the institutional response is discipline and reform, not withdrawal.

Leverage Stacking

NAV facilities sit on fund level debt that exists alongside leverage already inside portfolio companies. If portfolio performance softens, the NAV covenant can trip before the portfolio company default surfaces. The framing has been adopted by Cambridge Associates (advising ~$300B of private market commitments) and echoed in 2024 to 2025 commentary from Moody's and S&P. A $150 billion NAV market is large enough that a small number of covenant breaches would attract regulator and LP attention.

Sources: Institutional Investor (August 2023); Moody's NAV facilities commentary (2024 to 2025); S&P private credit sector commentary.

Valuation Ambiguity

NAV loans price off GP marks that update quarterly. Continuation vehicles ask LPs to roll at a price the GP partly sets. ILPA's 2023 to 2024 guidance moves the standard toward fairness opinions, LPAC consent before NAV facility activation, and disclosure of the roll price. Independent verification of marks for either structure is not yet standardized.

Source: ILPA Continuation Funds Guidance and disclosure templates, 2023 to 2024.

Concentration Response

The Teacher Retirement System of Texas (~$200B in plan assets) treats NAV loan utilization as an underwriting consideration for new PE commitments. JPMorgan was reported in May 2026 to be in discussions on a $4 billion plus synthetic risk transfer (SRT, a structure that passes losses up to a defined attachment point to outside investors while the loans stay on the bank's balance sheet) on its NAV exposure. The largest US public PE allocator and the largest US bank in NAV finance are both pricing concentration into their behavior while staying in the market.

Sources: Institutional Investor (August 2023); Financial Times, JPMorgan NAV SRT discussions (May 2026).

The category continues to grow. The infrastructure that prices, monitors, and absorbs it is what has to evolve.