Recent Developments in Private Funds
-- Increasing Presence of PE and PD Funds and Their Recent Traits
April 21, 2026
TAKEMURA Keita, IWAMURA Yuko, KUTSUNUGI Makoto
Financial System and Bank Examination Department
Abstract
Private equity (PE) funds and private debt (PD) funds have expanded their assets under management since the global financial crisis, especially in the United States. Recent developments have indicated subdued performance of PE funds, reflecting factors such as a decline in valuations of portfolio companies following the rise in foreign interest rates. Exit timelines for portfolio companies have also been extended. PD funds have demonstrated robust performance, supported by wide lending spreads; however, spreads are showing a tightening trend amid intensifying competition. Furthermore, while the portfolio companies of both PE and PD funds have maintained robust business performance, they are facing increasing interest payment burdens, warranting close attention to their creditworthiness. It is important to closely monitor future developments in this area, as Japanese banks and domestic institutional investors have increased their interconnectedness with PE and PD funds through investments and lending, which may have an impact on Japan's financial system.
Notice
The Bank of Japan Review Series is published by the Bank to explain recent economic and financial topics for a wide range of readers. This report, 2026-E-3, is a translation of the Japanese original, 2025-J-9, published in September 2025. Views expressed are those of the authors and do not necessarily reflect those of the Bank.
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