Private Markets Alert Newsletter

✍️ Op-Ed: The "Zero-Loss Fantasy" Is Over — And That's Not Entirely Bad

For years, private credit marketed itself on a near-mythological premise: institutional-grade returns with minimal defaults, limited volatility, and on-demand liquidity wrapped in a semi-liquid fund structure. That premise is now being tested in real time — and the results are uncomfortable.

The Medallia restructuring, crystallized this week, is the clearest possible articulation of what critics warned about. Thoma Bravo acquired the customer-experience software company for $6.4 billion in 2021 at the peak of the SaaS bubble. Five years, nearly $3 billion in private credit debt, and a disastrous intersection with AI disruption later, the firm faces a $5.1 billion equity wipeout. Lenders — Blackstone, Apollo, KKR, and Antares — are set to take the keys.

But here is the uncomfortable truth: the Medallia story is not an outlier. It is a case study in a pattern. Morgan Stanley has warned that private credit default rates could surge to 8% — more than triple the historical average — with pressure concentrated in AI-exposed software. BDCs are trading at their deepest discounts to NAV in over five years. Redemption requests across BCRED, Ares Strategic Income Fund, and Blue Owl have exceeded quarterly caps. The SEC is now openly flagging "emerging pressures" and citing valuation opacity as a core concern.

None of this means private credit is broken. The $3 trillion asset class has genuine structural advantages: patient capital, bespoke structures, and lender proximity to borrowers that syndicated markets can never replicate. Blackstone's decision to honor all BCRED redemptions — injecting its own capital rather than gating investors — was an act of institutional brand management that deserves credit.

What is broken is the pitch. Semi-liquid vehicles sold to retail-adjacent investors on the promise of quarterly access were always a structural tension waiting to detonate. The denominator effect, the software credit reckoning, and a higher-for-longer rate environment simply pulled the trigger.

The sector is maturing. Maturation is rarely painless. The managers who emerge stronger will be those who built portfolios around tangible asset-based finance, maintained honest valuations, and held the line on covenant quality. The rest will be working through restructurings for years.

🤝 Top Deals & Developments:

• Medallia Heads to Lenders in $5B+ Equity Wipeout Private credit lenders including Blackstone, Apollo, KKR, and Antares Capital are set to take control of Medallia after Thoma Bravo's equity — roughly $5.1 billion — is effectively wiped out in restructuring. Blackstone's BCRED marked the company's first-lien debt to 60 cents on the dollar as of Q1; FS KKR marked its exposure at approximately 79 cents, and Apollo Debt Solutions at 74 cents. The original $1.8 billion recurring-revenue loan supporting Thoma Bravo's 2021 LBO is now a case study in rate sensitivity, AI disruption, and the limits of covenant-lite structures. Source: Yahoo Finance / Reuters / PitchBook

• Blackstone/Tinicum Seal £1.4bn Senior plc Takeover A consortium led by Tinicum Incorporated and Blackstone agreed to acquire UK-listed aerospace and defence supplier Senior plc for £1.4 billion ($1.9 billion) — 300 pence per share. The deal ends months of competitive bidding that included Advent International and Arcline Investment Management. Tinicum and Blackstone intend to combine Senior with AeroFlow Technologies, an aerospace platform acquired in 2025. Senior counts Lockheed Martin, Boeing, and Airbus among its customers, with approximately 16% of revenues tied to defence. Source: Private Equity Wire / Reuters

• TPG Explores Options for Asia OneHealthcare at ~$7.6bn Valuation TPG has engaged Malayan Banking and UBS to assess strategic options for Asia OneHealthcare, the Kuala Lumpur-based medical services group, including a potential sale or IPO. A deal could value the company at up to 30 billion ringgit ($7.6 billion). The process reflects renewed activity in Asian healthcare exits as the regional M&A environment stabilises. Source: Bloomberg

• 26North Partners Closes $6 Billion Debut Fund — A US Record Josh Harris's 26North Partners closed its debut private equity fund at nearly $6 billion, surpassing its initial $4 billion target and setting a US record for a first-time fundraise. Commitments came from pension plans, sovereign wealth funds, and family offices. Harris personally seeded the fund. Source: Bloomberg

• BCRED Issues $850M Bond at Higher Spread Amid Redemption Pressure Blackstone Private Credit Fund priced an $850 million bond offering at a materially wider spread than its January issuance — reflecting mounting pressure on BDC credit. The deal coincided with Blackstone marking down Affordable Care's (ACI Group Holdings) dental-support debt to 70 cents on the dollar in Q1, from 80 cents in Q4. BCRED's non-accrual loans have risen, and the fund posted its first monthly loss since 2022 in February. Source: PitchBook / Benzinga

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