Portfolio Valuation: Private Equity and Credit

ILPA’s June 2026 draft Continuation Vehicle Guidance shifts the focus in GP-led secondary transactions from simply validating price to ensuring a transparent, well-governed sale process. Recognizing the rapid growth of continuation vehicles and the inherent conflicts created when GPs effectively act as both buyer and seller, the guidance emphasizes competitive bidding, early LPAC involvement, enhanced disclosures, longer election periods, and protections for rolling investors rather than relying solely on NAV or fairness opinions, though third-party valuations and fairness opinions remain an integral corporate governance practice to be followed.

ILPA’s June 2026 draft Continuation Vehicle Guidance shifts the focus in GP-led secondary transactions from simply validating price to ensuring a transparent, well-governed sale process.

Publicly traded BDC discounts are signaling a disconnect between private credit valuations and market-based pricing, raising questions about whether private NAV marks are overstated or simply lagging reality. The failed Blue Owl transaction and rising secondary market activity highlight investor demand for liquidity and skepticism toward “sticky” valuations, as public markets imply meaningful discounts to stated NAVs. While these discounts reflect factors beyond asset values, such as leverage, fees, and sentiment, they still provide a real-time benchmark that valuation professionals cannot ignore. Absent a rebound in BDC prices, persistent gaps between public prices and NAVs indicate that NAVs are too high for public BDCs and private BDCs to the extent private BDCs hold similar loans.