Private Debt’s Resilience And The Rise Of ABF And NAV Financing

While private equity and venture funds face a difficult fundraising environment, private debt continues to attract steady capital. The Q3 2025 PitchBook Global Private Market Fundraising Report shows an asset class that is not immune to the slowdown, but still comparatively resilient and evolving in ways that matter for both managers and allocators.

Under the headline numbers, two shifts stand out: a continued institutional bid for private credit, and the growing prominence of specialised strategies like asset-based finance (ABF) and net-asset-value (NAV) lending.

Fundraising remains high for the asset class

Private debt fundraising has slowed from the 2021–2022 peak, but remains elevated in historical context. PitchBook’s data shows that annual debt fundraising has exceeded roughly $200 billion for seven consecutive years, with 2021 marking the high point at around $340 billion. As of Q3 2025, year-to-date fundraising stands at about $154 billion, and trailing 12-month commitments are still in the ~$200 billion range, even though this period is on track to be one of the weaker years since 2011.

In other words, the pace has moderated, but the base is high.

At the same time, private debt assets under management have grown steadily over the past decade, supported by both net inflows and NAV growth. Dry powder has also increased, but not to the same degree seen in some private equity strategies. PitchBook’s charts indicate that uncalled commitments are sizeable but still proportionate to the overall AUM base, leaving managers with meaningful capacity without yet signalling an acute overhang.

The mix within private debt is also important. Direct lending continues to receive the bulk of commitments by capital raised, but the report notes that some of the largest individual funds closing in Q3 2025 are in more specialised segments such as ABF and NAV-focused vehicles.

Why allocators continue to back private credit

The continued support for private debt, even as fundraising in other private strategies has softened, reflects a combination of structural and cyclical factors.

First, return profile. Many private credit strategies offer contractual income streams with spreads above comparable public fixed income. In a world where base rates have risen and then begun to stabilise, floating-rate instruments in senior or asset-backed positions remain attractive relative to traditional bond allocations.

Second, capital supply dynamics. Regulatory changes and balance-sheet constraints have limited the ability of banks to provide certain types of corporate and speciality finance. Private lenders have stepped into that gap, offering customised structures and faster execution. For institutional allocators, this provides a way to access credit exposures that are less available in public markets.

Third, product development. The report highlights the role of interval funds, tender-offer funds and listed business development companies (BDCs) in opening private credit exposures to private-wealth channels. These vehicles, which sit between traditional closed-end funds and daily-liquidity products, have attracted strong inflows from high-net-worth and mass-affluent investors seeking higher-yielding fixed-income alternatives.

Taken together, these trends help explain why private debt has remained a core allocation for many investors even as they have recalibrated commitments to buyout, venture and some real estate strategies.

Asset-based finance: collateral-backed credit at scale

One of the fastest-evolving segments within private debt is asset-based finance. In ABF strategies, lenders extend credit against pools of underlying assets or cash flows, for example, trade receivables, consumer loans, equipment leases, or other financial and corporate assets.

PitchBook notes that asset-based finance has become a central focus for several large managers. A prominent example in Q3 2025 is KKR ABF Partners II, which closed at approximately $5.6 billion, more than double the size of its predecessor fund. Funds of this scale underscore how ABF has shifted from a niche pocket of credit to a mainstream strategy within large multi-asset platforms.

The appeal is clear. ABF structures can provide secured exposure, often with granular diversification across many underlying obligors. They tap into the growth of non-bank lending and speciality finance platforms globally, and they generate yield profiles that are attractive to both institutional and private-wealth investors.

At the same time, the risks are more complex than headline diversification suggests. Performance in ABF portfolios depends heavily on underwriting quality, servicing standards and the robustness of data on underlying pools. Correlations can rise quickly in stress, for example, when consumer credit deteriorates simultaneously across markets, and operational failures can undermine the expected loss profile. The PitchBook report flags these strategies as an important growth area, but implicitly assumes that institutional-grade governance and monitoring will be required to manage the associated risks.

NAV financing: portfolio-level leverage and its trade-offs

Alongside ABF, NAV-based lending has moved from an emerging technique to a defined strategy. NAV loans are typically extended to funds or holding companies and secured by the net asset value of a portfolio, rather than by individual operating companies.

PitchBook highlights NAV and related fund-finance strategies as a notable component of recent private debt fundraising. Several managers have raised dedicated vehicles focused on these instruments, often at multi-billion-dollar scale. NAV facilities offer flexibility. General partners can use them to support follow-on investments, bridge exits, or manage pacing without returning to LPs for additional capital.

The trade-offs are straightforward. NAV loans effectively add a layer of leverage on top of existing company-level or asset-level debt. If used conservatively, they can help avoid forced sales at inopportune times and give managers more room to manage through cycles. If used aggressively, they can amplify drawdowns, particularly if portfolio valuations reset while obligations to NAV lenders remain.

PitchBook’s framing is neutral but clear: NAV financing is becoming part of the standard toolkit in private markets, and its long-term impact will depend on how prudently it is used across vintages and strategies.

Reading the 2025 private debt picture

The Q3 2025 data does not present private debt as risk-free, nor does it suggest an unlimited growth path. Fundraising has softened from its peak, and some strategies are likely to face pressure if defaults or recoveries diverge from underwritten assumptions.

What it does show is an asset class that remains structurally supported by investor demand, evolving borrower needs and product innovation. Within that landscape, asset-based finance and NAV lending stand out as areas of rapid development, attracting some of the largest recent fund closes, and reshaping how credit is extended and managed in private markets. For managers, the challenge is to demonstrate that the incremental complexity and leverage in newer structures is matched by commensurate underwriting discipline and transparency.

Chief Brand & Investor Relations Officer

Sneha Dadrwal

Frequently Asked Questions

Q: Why has private debt fundraising held up better than PE and VC?

A: Because it offers contractual income, often senior or asset-backed positions, and fits the gap left by banks pulling back from some types of lending. That combination still appeals to institutions and wealth channels even as they slow commitments to classic equity strategies.

Q: What exactly is asset-based finance (ABF)?

A: ABF is lending against pools of underlying assets or cash flows, for example, receivables, consumer loans, leases, or other financial assets. Returns come from interest on those loans, secured by the underlying pool rather than a single corporate borrower.

Q: How is ABF different from traditional direct lending?

A: Direct lending usually finances individual companies. ABF finances asset pools. That can mean more granular collateral and different risk drivers, but also more dependence on data quality, servicers, and structuring.

Q: What are NAV loans and why are they growing?

A: NAV loans are facilities to funds or holding companies secured by the portfolio’s net asset value. They’re being used to fund follow-ons, bridge exits, or manage liquidity without calling more capital. They add flexibility, but also add another layer of leverage on top of existing company-level debt.

Q: How is private credit reaching individual investors?

A: Through vehicles like BDCs, interval funds, and tender-offer funds that package private credit into semi-liquid products. These sit between traditional closed-end funds and daily-liquidity mutual funds, and are increasingly used in private-wealth portfolios.

Sources

PitchBook, Q3 2025 Global Private Market Fundraising Report.