Private Markets Alert Newsletter

✍️ Op-Ed: The Regulatory Reckoning — When Watchdogs Stop Watching and Start Acting

There is a meaningful difference between a regulator signalling concern and a regulator opening enforcement files. For the past eighteen months, private credit has lived with the former — a steady drumbeat of speeches, guidance documents, and pointed remarks from SEC chairmen about valuation opacity and liquidity mismatches. That era is over.

As reported by the Wall Street Journal this week, the SEC has opened multiple enforcement investigations into large private credit managers, with a focus on how they value loan assets and whether their disclosed policies match actual practices. The Treasury Department has separately requested information from private fund managers and insurance firms about their business models. The Federal Reserve is querying banks about their exposure to private credit. All three arms of the US financial regulatory apparatus are now actively engaged — simultaneously.

This is not a coordinated campaign born of ideological hostility to private markets. It is a logical institutional response to an industry that has grown from a niche corner of finance to a $3 trillion systemic force in under a decade, largely beyond the supervisory architecture built for it. When BDCs trade at 17 to 26 cents below their stated NAV, someone in the market is wrong about what those loans are worth. Either public markets are overreacting, or private marks are stale. Regulators want to know which.

The recent credit fund adviser enforcement action — charged by the SEC in February for negligence-based anti-fraud violations tied to principal transaction pricing — is the clearest preview of where scrutiny leads. The firm originated loans through its parent, seasoned them for 30 to 60 days, and sold them to affiliated private funds at "fair value" — a term the SEC found insufficiently rigorous. That pattern of loans flowing between affiliated entities at manager-determined prices is not unique to Madison Capital.

For most managers, this regulatory inflection calls for a specific, practical response: a comprehensive review of valuation policies and procedures, a hard look at affiliated-party transaction disclosures, and a candid assessment of whether NAV methodologies can withstand adversarial scrutiny. Those who treat this as a compliance exercise rather than a governance imperative will find themselves ill-prepared. The enforcement calendar is only going to lengthen.

🤝 Top Deals & Developments: The $15 Billion Energy Race and the Week's Regulatory Shocks

• Apollo, Blackstone, and KKR Vie for Shell's LNG Canada Stake at Up to $15 Billion In what may be the year's defining private markets infrastructure transaction, Apollo, Blackstone, and KKR emerged this week as the final three bidders competing for Shell's 40% stake in the LNG Canada export project, with a deal expected to be valued well north of $10 billion and potentially reaching $15 billion, according to Reuters reporting published April 30. All three managers are leveraging their insurance subsidiaries — Apollo's Athene, Blackstone Credit & Insurance, and KKR's Global Atlantic — to fund their bids, a structure that reflects the growing role of insurance-linked capital in large infrastructure acquisitions. The allure of the asset has intensified as Middle Eastern energy supply disruptions have elevated North American LNG assets strategically. Shell is simultaneously pursuing a $16.4 billion acquisition of Canadian natural gas producer ARC Resources, announced April 27, creating the impetus to monetise the LNG Canada position. Source: Reuters via BOE Report

• Milken Institute Global Conference Opens — Regulatory Stress and Liquidity Dominate the Agenda The 29th annual Milken Institute Global Conference opened May 3 in Beverly Hills, drawing more than 4,000 attendees from private equity, banking, government, and technology. Private markets feature prominently, with dedicated sessions on private credit distress and innovation and navigating liquidity challenges in private equity. The conference arrives as the SEC enforcement disclosures, peak BDC redemption projections, and the LNG Canada auction collectively make this one of the most consequential weeks for senior private markets allocators in recent memory. Source: Milken Institute

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