Private equity funds are much maligned for being inaccessible and merely being a vehicle for the rich to get richer. Well, if you cant beat them, join them! A little known asset class made a few headlines in recent days when two participants Ares Capital Corp. and Apollo Investment Corp. filed public offerings to raise capital. These two companies are a subset of a little known asset class which was created to provide small investors access to private equity investments while also providing more capital to help small and middle market companies grow.

These companies are known as Business Development Companies (BDC) and, when publicly listed, are roughly akin to closed end funds. Ares and Apollo represent the most typical style of BDC those which provide financing through debt and equity instruments to middle-market companies. Typically speaking, the deals that these types of BDCs invest in are leveraged buyout transactions sponsored by a who’s who of middle market private equity firms GTCR, Audax, Apax, etc.

In order to classify as a BDC, the companies must follow two very particular guidelines. First, they must maintain leverage no greater than 200% their net assets. Second, they must distribute 90% of their income. This generally means that BDCs are slow moving, high yielding stocks and well suited for income-oriented investors.

Over the past year, BDCs have fallen out of favor and their stocks have nose-dived. Declining investor appetite towards debt investments as well as forced sales in debt and equity securities have taken a toll on the market value of BDC investmnts. Two of the most well known BDCs American Capital Strategies (NASDAQ:ACAS ) and Allied Investments (NYSEARCA:ALD ) have fallen on hard times and are in the process of deleveraging through forced sales on their portfolio. In the case of BDCs, the 200% of net assets rule can turn into shackles despite the companys modest leverage (versus other financial institutions).

BDC stocks, however, have fallen at an even greater rate than their net asset value. Before the Great Recession of 2008-2009, BDCs, much like closed-end funds. almost always traded near or above net asset value. Today, very few trade at even 90% of NAV. Instead, analysts believe that the funds are now priced on dividend yield with investors demanding significantly higher returns for the perceived risk. Could the recent success of capital raising activities by Apollo and Ares be a sign that investor appetite for private equity originated securities be returning? If so, BDC shares could benefit both by a rebound in portfolio market prices as well as a return to closed end fund-like valuations.

Interested in potentially investing in this space? A related companies search on Google Finance pulls up nearly every participant of note. A word of caution, while these businesses provide access to investments in private equity companies, it is often difficult to get much information outside of the names and market values of each portfolio company through public filings. Furthermore, since very few are trading at market caps representative of the book value of their investments, it is advisable to spend time reading each Companys 10Q before taking a dive into this space. I would suggest looking for BDCs with time left on debt commitments, net asset value to debt <1.9x and as much liquidity as possible.

Full Disclosure: Author does not have a position in any of the stocks listed in this article.