Business development companies (“BDCs”) continue to be an important source of capital for private equity-owned, small- and middle-market companies and an attractive investment vehicle for investors seeking exposure to private credit. As the BDC market has grown, sponsors and investors have increasingly focused on alternative BDC structures, capital raising, leverage, advisory arrangements and other key features of the BDC market. The increasing institutionalization of the BDC market is reflected in the growing use of joint ventures with institutional investors and the continued development of co-investment arrangements.
The regulatory landscape for BDCs also continues to evolve. The SEC’s proposed “Enhancing Retail Exposure to Private Markets” rulemaking is likely to further expand retail access to private market investments, while the SEC’s 2026 Registered Offering Reform proposal is likely to provide BDCs with greater flexibility to access the capital markets. These developments, together with the SEC’s continued evolution of its co-investment framework, could further affect the ways in which BDC sponsors raise, deploy and retain capital.
As the BDC market continues to mature, sponsors increasingly are evaluating existing public, private and non-traded BDC structures based on investor base, distribution channels, portfolio strategy and capital raising objectives. At the same time, portfolio quality and liquidity remain important considerations.
Access our updated BDC Facts & Stats, which provides a compendium of information regarding BDCs, including BDC assets under management, the terms of advisory agreements, private and non-traded BDC information and more.
Benjamin Paluk also contributed to the compendium.
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