A new standard for private credit valuations
Oxane Partners’ Private Credit+ Compass 2026 found risk management and valuations to be the leading operational challenge for private credit funds. As investor scrutiny intensifies, Kanav Kalia, managing director at Oxane, explains why firms are moving from periodic marks towards more frequent, transparent and defensible valuation processes.
A new standard for private credit valuations is emerging as risk management and valuation processes become increasingly important for private credit funds. According to a recent survey by Oxane Partners, 60% of private credit funds cite risk management and valuations as their leading operational challenge. This increased focus on valuations is driven by a greater emphasis on liquidity and transparency in private credit investments.
While firms are moving towards more frequent, transparent, and defensible valuation processes, achieving daily pricing in private markets remains challenging due to the lack of comparable secondary markets to listed markets. Valuations are typically adjusted on a monthly basis based on information from underlying borrowers, such as financial statements and compliance certificates.
The only ongoing variable in valuation is credit spreads, which help adjust the discount rate for market conditions. However, this limited data means that firms must rely on credible methodologies and audit trails to support their valuations. As valuations become more frequent and central to evaluating firm performance, they are coming under increasing scrutiny from limited partners (LPs) seeking reassurances about their credibility.
Investors are looking for transparency in how marks are reached, particularly given the impact of valuations on net asset value (NAV) loans and manager fees. Some larger institutions may take valuation operations in-house, while others may rely on external valuation providers to review methodologies and assumptions. Despite these challenges, frequent valuations provide investors with a clearer view of changes in portfolio value and help managers apply a consistent, well-governed approach during periods of redemption activity.
The industry's push towards greater transparency will continue, but frequency alone is not sufficient. Firms must also possess the necessary data, processes, and governance to justify each valuation and maintain investor confidence.
Written by urgent.news from Private Equity Wire's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
