The largest listed alternatives managers benefited from the strong performance of private credit in the third quarter, as PE returns slipped from the double-digit growth achieved in the two prior quarters.
The PE portfolios of Apollo Global Management, Ares, Blackstone, Blue Owl, The Carlyle Group, KKR and TPG returned 8.9% during the third quarter on a TTM basis, some way behind the 17.6% return of the S&P 500 index.
Blackstone, whose corporate private equity portfolio returned 13.6% gross, and TPG, which returned 12.9% across its growth and buyout strategies, were the top performers in the cohort.
This dip in returns was partly due to there being fewer realizations in the third quarter. Exits from PE portfolios among the Big Seven declined by 18.7% quarter-over-quarter to $18.3 billion, though executives continue to express confidence that lower interest rates will spur dealmaking.
“Directionally healthier markets, more liquid markets, better credit markets, better IPO markets; that’s healthier for realizations,” said Blackstone COO Jon Gray on an earnings call last month.
Meanwhile, the private credit portfolios of the so-called Big Seven achieved an aggregate TTM return of 12%, with five of them hitting double digits.
This outperformance is reflected in fundraising. Fifty-seven percent of the aggregate inflows of the Big Seven went into private credit, bolstered by new sources of capital, such as private wealth.
Tapping this channel gives managers access to scalable capital and fee-generating assets while making them less reliant on the support of tapped-out institutional investors, write PitchBook research analysts Jinny Choi and Kyle Walters in PitchBook’s Q3 2025 US Public PE and GP Deal Roundup.
This funding strategy brings risks. A flood of money into private credit is likely to put downward pressure on returns, particularly as the growing pile of capital is competing to fund a relatively weak stream of PE deals.
“We are seeing a trend line up on deal flow, but not to the extent where buyers of paper have more leverage on pricing and terms,” said Jeffrey Griffiths, global head of private credit at private capital advisory firm Campbell Lutyens. “It’s a good market for an issuer to go out and raise debt capital.”
Yuichiro Chino/Getty Images
Learn about our editorial standards.
