Due diligence of private equity managers: why the credit rating also matters in 2026
17 SEPT, 2026
By Joanna Piwko from RankiaPro Europe
The European private equity market remains stuck in an exit bottleneck. The ratio between distributions to investors and paid-in capital (DPI, Distribution to Paid-In Capital) in the European buyout has dropped to about 6% in 2025, against a historical average of 14%-16%, according to McKinsey data cited by S&P Global Ratings in the report Slow Exits Are Redrawing Europe's Alternative Asset Management Map (September 7, 2026).
The direct consequence is a collection at a decade low: 2025 was the weakest fundraising year in Europe of the last ten years and 2026 started just as weak. LP capital remains stuck in previous vintages and therefore becomes scarcer for new funds.
Not all managers are suffering in the same way. Managers with over 15 billion euros of AUM capture an increasing share of the collection, while smaller ones must demonstrate exceptional returns, sell to a larger operator or cease operations, according to S&P Global Ratings.
Traditional due diligence criteria (track record, team, fee structure) are no longer sufficient when the financial solidity of the manager becomes part of the investment risk.
The credit quality gap between large and small managers
- The threshold of 15 billion euros of AUM
S&P Global Ratings sets the reference threshold at 15 billion euros of AUM. Above this threshold, the most diversified European managers by strategy, geographical area and distribution channel are consolidating their position through M&A and new capital flows.
Below this threshold, the credit risk increases more markedly in a difficult market cycle.
- What the credit rating of the main European managers shows
Not all major private equity managers have a public credit rating, but those who do provide a useful benchmark for due diligence. According to S&P Global Ratings, most alternative managers maintain moderate leverage, a factor that gives them room to finance further M&A with their own or debt capital.
| Manager | S&P Global Rating | Note |
|---|---|---|
| EQT AB | A- | Among the most diversified managers by strategy and geographical area |
| ICG | BBB+ | Among the rated managers with the highest EBITDA margin of the group analyzed |
| Tikehau Capital | BBB- | Leverage metric based on net debt/net adjusted equity, for the manager's capital structure |
| Eurazeo | BBB | Has raised about 16% of the new AUM 2025 through the wealth channel |
| Partners Group | Not rated by S&P Global | Among the largest European managers by AUM |
| CVC Capital Partners | Not rated by S&P Global | Acquired US credit manager Marathon Asset Management in 2026 |
| Bridgepoint | Not rated by S&P Global | Comparatively smaller manager in the group analyzed by S&P Global |
Source: S&P Global Ratings, Slow Exits Are Redrawing Europe's Alternative Asset Management Map, September 7, 2026. Data as of 2025. For Tikehau and Eurazeo, the core leverage metric used by S&P Global is net debt on adjusted net equity, not net debt/EBITDA.
Why management fees protect large diversified managers
Management fees today represent 80%-90% of revenues in the alternative management sector, compared to 10%-20% of performance fees and carried interest, according to S&P Global Ratings. This proportion makes large diversified managers more resilient to shocks on individual asset classes.
The most concrete case is the exposure to software in private equity portfolios, made riskier by the volatility linked to artificial intelligence in 2026.
In its hypothetical stress scenario, S&P Global estimates that a manager with 30% of AUM in software companies, hit by a 50% drop in the book value of those assets in a year, would see total revenues drop by about 25%.
The operational point is clear: a manager dependent on carried interest is more exposed to a single negative market cycle than a diversified manager with recurring revenues from management fees.
Consolidation and M&A: the signal that the selector cannot ignore
The squeeze on private capital is accelerating consolidation. As S&P Global Ratings explains, EQT has reached an agreement to acquire British secondary market specialist Coller Capital, while CVC has acquired US credit manager Marathon Asset Management.
The convergence is not only among alternative operators. ICG and Amundi have started a partnership between alternative and traditional management, while BNP acquired AXA's asset management division in 2025.
European banks are also strengthening their savings management platforms, in search of stable fee revenues in a context of normalizing rates.
An M&A operation on the selected manager deserves an explicit question in due diligence: does the governance, the investment team or the alignment of incentives change compared to the already subscribed fund?
Operational checklist for the due diligence of the private equity manager in 2026
To the classic criteria (track record, team and fee structure) the current cycle adds at least five, all verifiable with public data or directly requestable from the manager.
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- AUM Size. Does the manager exceed the threshold of 15 billion euros indicated by S&P Global as a watershed for the ability to attract new capital?
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- Credit rating, if available. A public rating (S&P Global, Moody's, Fitch) provides an independent reference point on the financial solidity of the manager.
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- Revenue Mix. What portion of the manager's revenue depends on recurring management fees compared to carried interest and performance fees?
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- GP's capital commitment (skin in the game). The level of own capital required from general partners has risen from 1%-2% to 2%-4% of AUM: a commitment at the lower end of the range deserves an extra question.
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- Recent M&A activity. Has the manager been involved in acquisitions, mergers or partnerships in the last 12 months, and with what impact on team and governance?
The message from S&P Global Ratings for the European private equity market is direct: scale is now also a credit factor, not just a collection one. Managers above 15 billion euros in AUM use diversification, rating and own capital to consolidate their position, while smaller ones face increasing pressure on performance and survival.
Adding size, credit rating, revenue mix and M&A activity to the due diligence criteria already in use does not replace the analysis of track record and team: it completes it. Credit quality is now a selection criterion, not just a marginal financial detail.
