JPMorgan Seeks to Offload $4 Billion in Private Equity Loan Risk
JPMorgan Chase is in discussions to transfer risk tied to more than $4 billion in loans linked to private equity funds, signaling growing unease among major banks about rising strains in the buyout industry.
The largest U.S. bank is seeking to shift a portion of potential losses on so-called net asset value (NAV) loans to outside investors while keeping the loans on its balance sheet, according to people familiar with the matter cited by the Financial Times.
The proposed deal would offload exposure on roughly 12.5% of a loan pool exceeding $4 billion. In return, investors would receive low-teens returns, reflecting the higher premium now demanded to absorb risk in private equity portfolios.
Earlier, JPMorgan reported global secondaries transaction volume climbed to approximately $226 billion in 2025, marking a 41% increase from the previous year and underscoring the rapid expansion of the market.
NAV loans allow private equity firms to borrow against the value of their existing fund investments. Once considered relatively safe because they are backed by diversified portfolios rather than single companies, these loans have surged in popularity as firms seek liquidity amid a prolonged slowdown in mergers, acquisitions and initial public offerings.
The move comes as private equity faces multiple pressures, including weak deal exits, high interest rates and growing uncertainty around artificial intelligence’s potential to disrupt software and technology companies — a key sector for many buyout funds.
JPMorgan, a major lender to the private equity industry, first invested heavily in the sector during the era of low interest rates. The bank is now looking to reduce its exposure through a “significant risk transfer” structure, a move that would lower its regulatory capital requirements while maintaining client relationships.
Regulators in the U.S. and Europe have expressed concern about the rapid growth of NAV loans, describing the practice as “leverage on leverage.” Critics argue that such borrowing can mask underlying stress in private equity portfolios by delaying the recognition of weaker asset values.
Despite the concerns, the global NAV loan market has grown rapidly and now stands near $100 billion. It could expand to $350 billion by 2030, according to a report by AllianceBernstein.
The JPMorgan transaction reflects a broader trend among global banks, including Japan’s Mitsubishi UFJ Financial Group, to actively manage and reduce concentrated risks in private markets.
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