USA Trends and Developments Contributed by: Yana M. Mereminsky, Ramya S. Tiller, Erik J. Andrén and Vadim Avdeychik, Debevoise & Plimpton LLP
defy gravity, raising over USD80 billion in the first half, a new H1 record that is more than double the amount raised by secondaries funds in the first half of 2024. The current climate has also spurred many private equity sponsors to develop new and innovative prod - uct offerings that may not be reflected in the closed- end private fund totals noted above. In particular, more managers are engineering retail-oriented vehicles that temper illiquidity and lower entry hurdles. These vehi - cles typically take the form of registered fund prod - ucts or permanent capital private fund structures with some limited periodic redemption mechanic. In either case, such hybrid funds are designed to be a scalable, partially liquid bridge between private market returns and retail liquidity expectations. Even as market noise persists and sponsors explore creative new structures, enduring strength is observed in private equity funds. The structural advantages of substantial dry powder, longer investment horizons and operational flexibility position private equity to thrive where others asset classes may falter. With close to USD1 trillion in equity capital and another USD500 billion in private debt at the ready, the indus - try is not short on resources. While public markets seek direction, private equity sponsors will continue to differentiate themselves by leaning into their con - victions and thoughtfully allocating capital into areas disrupted by volatility. When macro-economic condi - tions ultimately improve, it is anticipated there will be an uptick in realisations that will quickly translate to a jump in fundraising. Fund Finance The current fund finance market can be described in three words: maturity, growth and innovation. While fund finance products and structures continue to evolve in response to market demands, the com - mercial and legal terms around more traditional fund finance transactions and structures are beginning to normalise as the market matures. One is seeing more competitive pricing and fee structures, standardisa - tion of core terms, such as borrowing base inclusion criteria and cash flow sweep constructs, and a healthy balance of traditional bank lenders and non-bank
credit providers offering an ever-increasing array of fund finance solutions. The fund finance market continued to experience remarkably strong growth through the first half of 2025, driven by the ability of alternative lending sourc - es with innovative financing products and structures to fill liquidity gaps of fund sponsors, while traditional fund finance lenders continue to grapple with interest rate increases, regulatory changes in capital treatment and other macro-economic events. At the same time, the appetite of sponsors for debt financing continues to be insatiable. The resulting competition for the lim - ited bank balance sheet capacity available to the fund finance market continues to fuel substantial demand for alternative liquidity providers and bespoke financ - ing solutions. With this demand comes opportunity, and the growth and expansion of the fund finance lender base and product offerings witnessed in recent years continued to proliferate through the first half of 2025. Subscription facilities remain a staple for many fund sponsors, and demand for capital call-backed credit continues its year-on-year growth. The use of asset- based leverage continued to expand beyond credit and secondaries funds and across a broader range of fund investment strategies, particularly private equity funds. Fund sponsors were observed deploy - ing NAV solutions up and down the capital structure of their fund platforms. Sponsors increasingly turned to these asset-based financing products to consummate acquisitions, to purchase portfolio company debt and, with growing scrutiny, to make distributions to limited partners. The proliferation of NAV facilities, particularly when used to fund distributions or to support a struggling portfolio, continues to draw the attention of the inves - tor community and the Institutional Limited Partners Association (ILPA). While ILPA has not publicly criti - cised NAV facilities as fervently as it had initially criti - cised subscription credit facilities a few years ago, the group has strongly urged fund sponsors to disclose the rationale and key terms of NAV facilities and to engage investors for consent to use NAV facilities when clear authorisation is lacking. Not surprisingly, an increasing number of side letter requests around
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