European private equity DPI at 6% in 2025: why liquidity is blocking the sector
21 SEPT, 2026
By Joanna Piwko from RankiaPro Europe
A new report by S&P Global Ratings, published on September 7, 2026, captures an unprecedented phase of liquidity stress for European private equity. The title, Slow Exits Are Redrawing Europe's Alternative Asset Management Map, summarizes the problem: investment exits are slowing down and this is reshaping the balance of the sector.
The most cited data concerns the DPI, the indicator that measures how much capital funds have returned to investors. In 2025 it fell to about 6% of AUM, against a historical average of 14%-16%, according to McKinsey data cited by S&P Global Ratings. For those who select funds, the signal is clear: liquidity is the main risk to monitor in alternatives.
Why distributions have stalled
The main cause is the managers' inability to exit investments at historical valuations. Macroeconomic volatility, poor M&A activity and fears about software company valuations have slowed realizations. The result is a bottleneck that propagates along the entire chain: from managers to limited partners (LPs), to new capital commitments in funds.
The collapse of DPI in numbers
The comparison between the historical average and the 2025 data makes the extent of the deviation visible. The following table summarizes the two key indicators of the report: the DPI and the capital that managers commit to invest in their funds, which has grown precisely to reassure investors about the alignment of interests.
| Indicator | Historical average | 2025 |
|---|---|---|
| DPI (distributions on paid-in capital / AUM) | 14%-16% | about 6% |
| Capital committed by GPs ("skin in the game") | 1%-2% of AUM | 2%-4% of AUM |
Alternative exit routes: NAV financing and continuation vehicle
To compensate for the blockage of traditional exits, managers resort to alternative liquidity tools. NAV financing provides debt guaranteed by the net value of the fund to finance distributions to LPs. Continuation vehicles, on the other hand, transfer assets to a new vehicle controlled by the same manager, one of the drivers of the growth of secondary markets observed in recent years.
The chain effect on the 2025 collection
The LPs' capital remains blocked in old vintages and becomes scarce for new commitments. Some institutional investors have reduced their allocation towards private equity and private debt. 2025 was the worst year of the decade for fundraising in Europe, and 2026 started weak.
The contraction does not affect everyone in the same way. The largest managers are capturing an increasing share of the fundraising, while smaller players struggle to launch new funds without an exceptional track record. At the same time, retail and insurance are increasing their weight in alternative markets, partly to compensate for the retreat of some institutional LPs.
More skin in the game for managers
To align interests in an uncertain context, LPs ask managers to invest more of their own capital in new funds. The so-called skin in the game has risen to 2%-4% of AUM, compared to the historical 1%-2%. Many managers finance this commitment by borrowing against unrealized carry or shares in their own funds.
What changes in practice
The picture painted by S&P Global Ratings indicates a clearer division between managers with sufficient scale to absorb the liquidity shock and smaller operators exposed to difficult fundraising and rising capital costs. Monitoring DPI, use of NAV financing and level of skin in the game becomes an integral part of due diligence on any private equity vehicle.
