Collateralised Fund Obligations (CFOs) are rapidly evolving from a niche financing tool into one of the most closely watched segments of the private markets industry, according to panellists at Funds Europe‘s European Fund Finance Securitisation Forum held in London today who pointed to growing demand from sponsors, insurers and family offices as the asset class continues to mature.
Greg Fayvilevich of Fitch Ratings opened the session by noting that although CFOs have gained significant traction in recent years, the market itself is not new. Fitch rated its first CFO transaction more than 20 years ago, and structures have since demonstrated resilience through both the global financial crisis and the Covid downturn. Fayvilevich estimated annual issuance reached between $20bn and $25bn last year, with activity expected to rise further in 2026.
Pierre Maugue, of the law firm Debevoise & Plimpton, explained that today’s market broadly consists of two types of transactions. Liquidity CFOs allow institutional investors such as insurers or sovereign wealth funds to generate liquidity against portfolios of fund interests while retaining exposure to the underlying assets. GP CFOs, meanwhile, are increasingly being used as fundraising tools, enabling sponsors to access insurance capital through securitised debt structures.
Ian Wiese of Barings Portfolio Finance said difficult fundraising conditions and slower distributions across private markets have accelerated demand for portfolio finance solutions. He noted that insurers are particularly attracted to investment-grade tranches because they offer long-duration exposure and predictable cash flows that align with insurance liabilities. Wiese also stressed the importance of diversification and cash generation within the underlying portfolios.
Anthony Lombardi of the law firm Dechert highlighted the complexity of CFO structures, which must balance long-dated liquidity management with the irregular cash flow profile of private market assets. He explained that many transactions incorporate revolving liquidity facilities, reserve accounts and diversified asset pools combining buyout, credit and secondary funds to smooth distributions and support debt servicing.
From an investor perspective, Farid Moeinifar of Cooper Family Office said CFOs offer attractive diversification and enhanced return opportunities through exposure to multiple funds within a single structure. He described the “complexity premium” available in high-quality CFOs as particularly compelling for sophisticated investors.
Regulation remains a central issue for the sector. Maugue noted that US insurance regulation continues to shape market development, particularly around whether CFO debt qualifies as bond-like for regulatory capital purposes. However, he said the market has become more comfortable with current approaches, helping drive renewed issuance activity.
The panel concluded that innovation will continue to define the CFO market, with evergreen structures, longer reinvestment periods and hybrid portfolio strategies likely to drive the next phase of growth.
