Private Equity Faces Pockets of Distress for Long-Held Assets

Private equity firms’ strategy of shuffling assets to buy more time for investments to pan out is starting to show signs of weakness.

More than 100 so-called continuation funds were raised between 2019 and 2021 to move portfolio companies from one private equity vehicle to new ones backed by fresh capital. Some are now running into trouble amid a sluggish dealmaking environment and declining asset values.

Enviva, a supplier of wood pellets that Riverstone Holdings rolled into a 2020 continuation vehicle, emerged from bankruptcy in December with a restructuring agreement that cut $1 billion of debt and gave ...