Private equity groups are deploying complex financing structures, including collateralised fund obligations (CFOs) and tranched net asset value (NAV) loans, to attract cash-rich insurers and ease a prolonged dealmaking drought. According to Thomas Speller, co-head of funds ratings at Kroll Bond Rating Agency, structured debt designed for varying risk tolerances has increased since last year. These tools have fueled the growth of secondaries funds — vehicles that buy stakes in mature buyout funds from cash-strapped investors — by lowering their cost of capital.

Both CFOs and tranched NAV loans slice debt into senior and junior tranches. Insurers typically take the safer senior portion, while private credit funds absorb the riskier junior slice. CFO issuance by secondaries funds has surged from just over $400mn in 2021 to $6.5bn in 2025, per KBRA. Blackstone explored a CFO on over $2bn of leveraged buyout stakes in June, and Franklin Templeton’s secondaries arm closed a $1.5bn CFO in August.

Tranched NAV loans, secured against a secondaries vehicle’s stakes in hundreds of buyout funds, are a newer trend. Banks like JPMorgan and Société Générale, alongside private credit lenders Blackstone and Ares, provide NAV loans. Recently, a handful of secondaries funds began tranching their own debt to directly access insurance capital. Critics note these structures add leverage atop already leveraged portfolio companies.