NEW YORK/LONDON, March 12 (Reuters): Investment funds run by big financial firms such as KKR and Blue Owl have seen their stock prices slide in recent weeks as investors question the quality of the loans the funds have made.
Private credit - lending directly to businesses outside the banking system - has ballooned into a $2 trillion industry. But concerns over transparency and lending discipline have rattled confidence.
The pressure is particularly visible in vehicles open to retail investors - a group private funds have targeted aggressively.
Publicly traded business development companies (BDC) - a common way Americans access harder-to-trade assets - trade at an average of 78 cents for every dollar of reported assets. That's down from 85 cents at the start of this year and about a dollar in early 2025, according to research firm Morningstar.
A discount to ?asset value signals that investors doubt the assets are worth what the managers estimate.
Most of the 20 biggest BDCs have seen their stock prices fall relative to asset values over the past year, and nearly all now trade at discounts. The sector has also been hit by worries about how artificial intelligence could affect software companies, a major area of lending.
Examples include: FS KKR Capital Corp at 51 cents per dollar of assets, Blue Owl Technology Finance Corp at 68 cents, and Prospect Capital Corporation at 44 cents, according to Raymond James data published on Monday.
Carlyle's Secured Lending fund trades at 68 cents and Blackstone's Secured Lending Fund at 88 cents. Even the biggest BDC - a $31 billion fund run by Ares Management - trades at 94 cents on the dollar.
The companies declined to comment or did not respond.
Larger managers say their portfolios remain stable despite market volatility, though some have acknowledged strains. Executives at KKR and Blackstone funds said in February that some borrowers are struggling.
Morningstar's Jack Shannon said investors appear to believe the sector's "best days are behind it" after rapid growth "forced firms to compete" by offering higher returns or easing lending protections.
