Private equity firms are increasingly tapping the high-yield bond market to extract cash from portfolio companies in order to fund payouts to themselves and their investors, according to a report by Bloomberg.
Bloomberg data puts these dividend loans as hitting $28.7bn in 2025 so far, on track to surpass the 2021 record of $28.8bn.
This trend comes as successful exits are proving increasingly challenging, with the IPO market and M&A continuing to underperform. A report by Bain & Co earlier this year estimated that more than 18,000 private capital funds were collectively seeking $3.3tn.
This month, private equity firm Thoma Bravo used a $750m loan for cybersecurity firm Darktrace to fund a payout to shareholders. Last month the firm raised debt on Ping Identity Holding Corp to fund a $1bn payout.
