Private Equity Found a Second Liquidity Trick, and It Doesn't Even Require a Sale
Secondaries already hit a record this year. Now sponsors are borrowing directly against portfolio companies through private credit giants like Apollo and Bain. No transaction required.
NEW YORK, August 27, 2026. Private equity's secondary market already had its moment this year. Transaction volume hit a record in the first half of 2026. Sponsors and LPs traded fund stakes and ran continuation vehicles. The goal was liquidity that a stalled M&A and IPO market wouldn't provide. That was the industry solving its exit backlog by finding someone, anyone, willing to buy something secondhand. Bloomberg reported this week on a second, more direct fix. Sponsors are increasingly skipping the sale entirely. Instead they're borrowing straight against their portfolios. Complex financing arrangements with private-markets lenders such as Apollo and Bain do the same job differently. Cash reaches investors without a transaction ever changing hands.
The distinction matters more than it sounds. A continuation vehicle still requires two sides to agree on what an asset is worth today. Then they have to complete an actual deal. A NAV loan or a fund-level credit facility requires none of that. The sponsor borrows against the marks already on its books. It distributes some proceeds and defers the pricing question entirely. Nobody has to test it against a real buyer. That's liquidity without price discovery. A secondary sale at least forces someone to write down a number they're willing to stand behind.
Private credit lenders are positioning for exactly this. Proskauer's annual survey covers more than 150 private credit firms managing a combined $4.1 trillion. 91% expect deal activity to increase over the next 12 months. Respondents ranked "sponsors seeking realizations" as the single biggest driver of deal flow. That ranked ahead of dry powder levels or macroeconomic risk. That's a specific and telling answer. The economy hasn't gotten better. Sponsors just need liquidity badly enough to borrow for it. Private credit has capital sitting around waiting for exactly that kind of demand.
It's not hard to see why this route beats another round of secondary sales. Jefferies found average LP portfolio pricing fell to 87% of net asset value in 2025. That's a real discount to the marks funds were carrying. Selling a stake secondhand means accepting that discount is real. Borrowing against the same portfolio at its existing marks accepts nothing yet. The loan still has to get repaid eventually. Ideally that happens out of a real exit, not another loan stacked on top of the first one.
That's the trade sponsors are making, and it's worth being honest about what it is. Financing against static marks defers the reckoning on valuation instead of resolving it. It works fine as long as the eventual exit is good enough. Then the financing looks sensible in hindsight. If it isn't, the sponsor now owes more against the company than it's worth. That's on top of whatever the fund already owed. Secondaries forced a price. This doesn't. That's precisely the appeal.