Hybrid Capital Now Has Its Own Funds, From Buyout and Credit Firms Alike
Apollo, GTCR, Arcmont, Crestline and Ares all raised dedicated funds for capital that sits between debt and equity. Raised is not yet deployed.
NEW YORK, October 2, 2026. A product between private credit and private equity now has dedicated funds. Buyout firms raise them. Credit managers raise them. The successor funds keep getting bigger.
The product goes by several names: hybrid capital, capital solutions, structured equity. The terms differ. The shape is the same. It is minority capital that protects the investor on the downside and shares in the upside.
The funds keep stepping up
Apollo closed Hybrid Value Fund III at about $6.5 billion in May. Its two predecessors closed at $3.3 billion in 2019 and $4.6 billion in 2022.
Arcmont, the European credit affiliate of Nuveen, closed Capital Solutions Fund II at about €1.5 billion. That is nearly double Fund I. Crestline closed its second European fund at $625 million in August, nearly 75 percent larger than the first.
On October 1, Ares said it raised about $4.2 billion for its first Global Structured Solutions fund. The target was $1 billion. The fund provides structured capital to private equity managers. It sits inside the Ares secondaries team.
Buyout firms are selling it too
GTCR is a buyout firm. On July 29, it closed its debut Capital Solutions Fund at $1.25 billion, according to PR Newswire. Buyouts reported that co-CEO Collin Roche wants the strategy to be “a problem solver.” That includes other firms facing liquidity issues.
So a sponsor now sells capital to its peers. Sixth Street runs the same play from the other direction. On June 3, it announced a minority growth equity investment of more than $1 billion in Kpler. The prior sponsor, Five Arrows, exited without a sale of control.
Why now
Exits are slow. White & Case spoke to Private Equity Wire in August. Sponsors in the UK and Europe, it said, are using minority sales, special situations and hybrid capital. The goal is cash for LPs. It described hybrid investors as combining “downside protection with participation in future equity growth.”
Longer holds create the demand. A sponsor that cannot sell can still sell part of a company.
What the numbers do not show
Raised is not deployed. Arcmont has committed roughly 55 percent of its new fund. Crestline has committed roughly 35 percent of its own. Most of the money is still waiting for a deal.
There is also no verified market-wide total. We looked for one and did not find a dataset. The fund-by-fund evidence is real, but it is a sample.
These are also still separate funds with separate fee structures. This is a new product line at old firms, not one asset class absorbing another.
What to watch
Watch deployment pace at the Arcmont and Crestline funds. Watch whether more buyout firms follow GTCR with debut vehicles. If Hybrid Value IV tops $6.5 billion, the middle is still growing.