A new standard for private credit valuations
PARTNER CONTENT
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.
As private credit continues to mature and move further into the institutional mainstream, valuations are drawing greater attention. This was confirmed in a recent survey by private credit solutions provider Oxane Partners, Compass 2026, where 60% of private credit funds reported that risk management and valuations were their leading operational challenge.
One reason valuations are drawing more attention is because of a greater focus on liquidity and transparency. Investment firms have rolled out structures such as semi-liquid funds, which provide investors with a degree of the liquidity available in public markets.
At the same time, investors are looking for more detailed information on underlying fund performance. Currently, that transparency is coming through more frequent valuations: Apollo has committed to providing daily pricing of its private credit funds by the end of September. But this is hard to achieve in private markets.
“For public trades, your valuation is determined by market factors. While there is a growing secondary market in private trades, it’s not comparable to listed markets,” explains Kanav Kalia, managing director of Oxane Partners.
Instead, firms require a credible underlying methodology for how they arrive at a valuation. “They need a full audit trail and history, they need trend analysis, all these things are not possible with a manual process,” Kalia says.
And the information required to make these calculations is generally not being fed to firms daily. For private credit, Kalia explains that after factoring in the underwriting details of the transaction, the valuation is then adjusted as new information comes in from the underlying borrowers, which typically happens on a monthly basis.
This could include financial statements and compliance certificates. In between the receipt of this, firms have limited additional data on portfolio performance which they can use for their calculations.
“The only thing that changes on an ongoing basis are the credit spreads…you can see where the credit markets are to adjust for the discount rate and arrive at a valuation,” Kalia says.
While this gives firms a more current view of market conditions, it doesn’t necessarily describe what is changing within the portfolio.
Despite these challenges, regular marking continues to be a popular approach. “A lot of firms are performing more frequent valuations to adjust for what the credit markets are saying right now,” he says.
Doing so daily is difficult to manage manually. Even for the largest firms, the operational burden would be too large. “Five years ago, firms were not open to automated processes. Now they are performing these valuations in a highly structured and tech-driven manner,” Kalia says.
With automation now widely available, the decision on whether to begin daily marking is not necessarily driven by firm size, but by the nature and complexity of the assets being valued. “We are performing valuations on synthetic risk transfer transactions for the firms who are providing the risk protection to the banks,” Kalia says.
Under the microscope
As valuations become more frequent and play a more central role in evaluating firm performance, the processes themselves will come under scrutiny, with LPs looking for reassurances about their credibility.
The question will increasingly be whether investors can understand and trust the process behind the mark. This is especially the case given the impact of valuations on firm finances. They play a central role in determining NAV loans and manager fees, meaning GPs could be incentivised to favour a more optimistic approach.
“LPs typically do not have the bandwidth to obtain these reassurances themselves, so they will often look to an external valuation provider,” says Kalia. For GPs, this can mean bringing in a third-party to review the methodology and assumptions behind their marks, giving LPs another layer of assurance.
For some larger institutions that work with private credit funds and do have the capacity, they may be able to take these operations in-house. “Banks are doing the same by shadow-marking private credit funds, to ensure their reporting is consistent,” he adds.
This is leading to a broader operational change across the industry, with firms, allocators and service providers all being asked to track portfolio performance more closely. Valuations are therefore becoming a more continuous part of portfolio oversight, rather than a periodic exercise carried out at set points in the year.
But they are also only one part of the wider push for transparency. Recent redemption activity in semi-liquid funds has placed greater focus on whether reported NAVs are timely, consistent and supported by credible valuation processes.
A move towards weekly or daily valuations would outpace redemptions, which are typically possible on a monthly or quarterly basis for evergreen funds. More frequent valuations can provide investors with a clearer view of changes in portfolio value, while helping managers apply a consistent and well-governed approach during periods of increased redemption activity.
For an industry already adapting to more frequent valuations, the move towards greater transparency is far from over. But frequency alone will not be enough. Firms will also need the data, processes and governance to explain how each mark was reached and give investors confidence in the numbers they are being shown.
Kanav Kalia, Managing Director, Oxane Partners – Oxane Partners is defining the new industry standard for technology solutions across Private Credit+ strategies and structures. Through its Oxane Panorama platform and deep credit domain expertise, Oxane supports investment banks, private credit funds, and institutional investors across portfolio and risk management, credit facility management, analytics, valuations, and facility administration. Founded in 2014, Oxane has offices in London, New York, Gurgaon, and Hyderabad, and supports more than 100 clients representing over $1.4 trillion in aggregate client AUM.
