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Private Equity Turns to $3 Trillion in Untapped Value for Loans

Dec. 31, 2020, 6:57 AM

Private equity firms on the hunt for capital are increasingly turning to specialty lenders for financing and providing a valuable asset as collateral: stakes in their funds.

The buyout industry has about $3 trillion of unrealized value on its books, according to Preqin. And it’s tapping that to land loans for bolt-on deals, to refinance debt or bail out struggling companies in their portfolios.

Investors are racing to make loans. Lender 17Capital saw record demand and provided $1.5 billion of portfolio financing this year. U.K.-based Silicon Valley Bank, part of SVB Financial Group, did a year’s worth of ...