[nocoiner]

My guess is mostly b, though some of a - see below. One thing that I didn’t really get into is that this isn’t really indicative of a shortage of third party investor capital and a necessity to raise third-party capital on punitive terms.

To oversimplify slightly, assume that every investment is funded by 60% debt, 39% equity from limited partners and 1% from the private equity sponsor - that 1% representing their common equity participation in the deal (which they’re putting up both because they presumably think it is a good opportunity to invest their personal money as well as to demonstrate alignment with their limited partners). This article is describing how that 1% is getting funded. So instead of coming out of their personal checking accounts, the private equity investment professionals are getting a private capital provider to lend it instead at credit card rates.

So this article probably indicates that deals are in a bit of a lull right now (no exit proceeds from prior investments to fund new investments) and traditional banks have tightened up lending. A few years ago, traditional banks were making similar loans to sponsors at low, low single-digit interest rates (think SVB and their personal loan product portfolio), so now instead the sponsors are having to tap private credit providers, who are going to insist on a much higher rate of return.