In recent years, non-bank lending to private equity-owned, small- and middle-market companies has increased significantly. Within this growing sector, private and non-traded BDCs have outperformed other non-bank lenders in many respects. Private and non-traded BDCs have demonstrated notable advantages in terms of portfolio return and quality and investor alignment, and they often benefit from less exposure to the volatility of public markets. Since 2020, assets under management by BDCs has increased from approximately $127 billion to approximately $451 billion in 2025, representing a compounded annual growth rate in excess of 28%. This expansion reflects both growing investor appetite for yield and the increasing confidence in BDCs as viable, long-term sources of capital for middle-market borrowers.
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