Nontraded BDC Net Outflows Reach $4.1B in Q3 as Fundraising Falls to Lowest Level Since 2020
Nontraded business development companies raised $1.5 billion in the third quarter of 2026, the lowest quarterly total since Q4 2020, according to investment banking firm Robert A. Stanger & Co. Redemptions outpaced new capital by $4.1 billion, the third consecutive quarter of net outflows. Third-quarter figures are preliminary, with approximately 98% of the market reporting.
Q3 2026 fundraising fell 87% from $11.6 billion in Q3 2025 and dropped below the prior low of $2 billion set in Q2 2026, according to Stanger. The Q4 2020 mark predates fundraising at Blackstone Private Credit Fund and Blue Owl Credit Income Corp., Stanger said. Year-to-date fundraising through September totaled $8.6 billion, down 76% from $35.1 billion a year earlier.
Sponsors met approximately $5.6 billion in redemptions in the third quarter, a modest decline from the previous period. Through September, sponsors have returned more than $18.2 billion to investors against $8.6 billion in gross fundraising, leaving $9.7 billion in net outflows year to date, according to Stanger. Third-quarter figures are preliminary, with approximately 98% of the market reporting.
The net-outflow streak began in the first quarter of 2026, when outflows exceeded inflows for the first time as fundraising dropped 59% year over year.
Aggregate net asset value for publicly registered NAV BDCs declined 2.4% from Q2 to $119.3 billion, while NAV per share remained largely stable, according to Stanger.
Redemption requests fell to 11.5% of NAV in Q3 2026 from 12.5% in the previous quarter. Sponsors met 40% of requests, leaving an estimated $8.2 billion unmet, compared with 37% met and an estimated $9.8 billion unmet in the second quarter, according to Stanger.
Six funds prorated requests in the third quarter, down from eight in the prior quarter. BlackRock Private Credit Fund, or BDEBT, and Golub Capital Private Credit Fund, or GCRED, met all Q3 2026 requests after prorating in the second quarter.
Investment performance provided a counterpoint to weakening capital flows. The Stanger NL BDC Total Return Index gained 2.2% in the third quarter, its strongest quarterly gain since Q4 2024, following a flat first quarter and a modest 1.2% gain in the second quarter. All 24 BDCs in Stanger’s quarterly performance rankings posted positive Q3 returns.
In the 12 months ended Sept. 30, the Stanger index returned 5.3%, compared with a 4.4% decline for the S&P BDC Total Return Index.
Blue Owl Technology Income Corp. led three-month returns at 3.9%, and TPG Twin Brook Capital Income Fund led one-year returns at 10.3%, according to Stanger. PGIM Private Credit Fund led three-year returns at 11.9% annualized, and Blue Owl Credit Income Corp. led five-year returns at 9.4% annualized.
“In Q2, we said the months ahead would test valuation discipline as sponsors managed portfolios to fund ongoing liquidity demand,” said Kevin T. Gannon, chairman and chief executive officer of Stanger. “Through Q3, valuations have held. The non-listed BDC market is contracting as investors withdraw capital, not because of broad-based deterioration in NAV per share, and stable valuations have allowed recurring income to translate into improving total returns. The key question now is whether NAVs can remain stable as continued redemption pressure tests sponsors’ ability to generate liquidity through portfolio realizations.”
Founded in 1978, Robert A. Stanger & Co. Inc. is an investment banking firm providing advisory, valuation, and capital markets services to real estate investment trusts, partnerships, and related entities.
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