Blackstone is seeking to sell more than $2bn of stakes in private investment funds through a securitised structure, in a move that highlights growing demand for liquidity solutions across the private equity industry, according to a report by Bloomberg.
The report cites unnamed people familiar with the matter as revealing that the transaction would package existing exposures to leveraged buyout funds into a collateralised fund obligation (CFO), allowing the firm to distribute risk and returns across multiple tranches of debt sold to investors.
The structure represents one of the largest potential fund-stake securitisations in recent years and reflects an expanding toolkit for managing legacy private equity portfolios accumulated during the low-rate investment cycle of 2020–2022.
The deal is designed to create liquidity without requiring the outright sale of underlying fund positions, enabling asset managers to recycle capital while maintaining exposure to long-term private equity assets. Similar structures have increasingly been used to bridge the gap between illiquid fund holdings and investor demand for cash distributions.
Market participants note that demand for such products has been supported by institutional buyers – particularly insurance investors seeking higher-yielding, investment-grade-rated tranches within diversified securitised exposures to private markets.
The broader market for fund-stake securitisations has been expanding, with estimates suggesting issuance could exceed $30bn in the near term as managers look for alternatives to secondary sales and traditional fund exits.
The trend comes amid mounting liquidity pressure across parts of the private equity ecosystem, where slower exit activity has made it more difficult for managers to return capital to limited partners. Some investors have responded with increased redemption requests in semi-liquid fund structures, prompting several managers to implement withdrawal limits in recent months.
For example, Partners Group recently capped redemptions in one of its evergreen vehicles after reporting elevated withdrawal demand, underscoring broader concerns about liquidity mismatch in private markets products.
Securitisation activity in this space is not new, but it is gaining scale. Comparable transactions, including a prior issuance by Carlyle Group’s AlpInvest unit, have demonstrated growing investor appetite for structured exposure to private equity fund stakes.
