Investors demand $15.6 billion from private credit, get back just $5.9 billion.
The widening gap between redemption requests and actual payouts points to a liquidity mismatch that is becoming harder for fund managers to paper over, with even less-exposed names like Apollo, Ares and HPS now seeing requests accelerate. Managers gating withdrawals to preserve capital, rather than meeting requests in full as some did earlier in the year, signals the industry expects the redemption cycle to run longer rather than resolve quickly. The sharper concern is the collapse in new fundraising, since private-credit funds rely on fresh inflows to sustain lending capacity; a prolonged funding drought would tighten credit availability for lower-rated borrowers and raise default risk at the margin, particularly for sectors already under structural pressure.
--- Investors sought to pull $15.6 billion from private-credit funds in Q2, up from $13.9 billion in Q1, but managers returned just $5.9 billion as new fundraising fell to an 18-month low of $500 million in May, Robert A. Stanger data show.
Info via the Wall Street Journal, gated.
Summary:
- Investors sought to withdraw $15.6 billion from widely held private-credit funds in the second quarter, up from around $13.9 billion in the first quarter
- Fund managers returned just $5.9 billion in the second quarter, down from $7.4 billion in the prior period, according to investment bank Robert A. Stanger
- New fundraising for the private-credit industry totalled around $500 million in May, the smallest inflow in at least 18 months and a roughly 75% drop from January
- Blackstone honoured all redemption requests in the first quarter but has since capped withdrawals at 5% to preserve capital for future demands
- Redemption requests jumped for most large managers including Apollo Global Management, Ares Management and BlackRock's HPS private-credit unit
- Blue Owl saw some relief, with redemption requests for its largest business-development company falling to 19% of shares outstanding from about 22%, though still the highest among large peers
- A fund managed by Oaktree Capital Management bucked the trend, with redemption requests falling to 4.5% of shares from 8.5% in the first quarter, helped by rising net asset value and no nonperforming loans
Redemption pressure on private-credit funds intensified in the second quarter, with investors seeking to withdraw more money even as fund managers returned less of it. Investors asked to pull $15.6 billion from widely held private-credit funds, known as business-development companies, up from roughly $13.9 billion in the first quarter, according to data from investment bank Robert A. Stanger. Managers returned just $5.9 billion over the period, down from $7.4 billion in the prior quarter, widening the gap between what investors want out and what they are actually getting.
The figures point to individual investors realising they cannot exit these funds as quickly as they entered them, prompting a growing number to begin withdrawing. Fund managers, in turn, appear to be preparing for an extended period of elevated redemptions rather than a short-lived spike. Blackstone, which honoured all redemption requests in the first quarter, has since capped withdrawals at 5% to preserve capital for future investor demands. Redemption requests also rose for several large managers that had been relatively insulated earlier in the year, including Apollo Global Management, Ares Management and BlackRock's HPS private-credit unit.
Blue Owl, widely seen as the bellwether for selling private-credit funds to individual investors, saw some easing, with redemption requests for its largest business-development company falling to 19% of shares outstanding from about 22%, though that remains higher than any of its large competitors. A fund managed by Oaktree Capital Management moved in the opposite direction, with redemption requests dropping sharply to 4.5% of shares from 8.5% in the first quarter. Research from Raymond James found the Oaktree fund was among the few business-development companies to report rising net asset value and no nonperforming loans in the first quarter.
The bigger concern for the industry may be the collapse in new fundraising rather than the redemption requests themselves. New money flowing into private-credit funds totalled only around $500 million in May, the smallest inflow in at least 18 months and a roughly 75% drop from already depressed levels in January. Fund managers depend on continued growth to support their share prices, and a sustained funding shortfall would limit their capacity to keep lending. That could constrain investment and expansion plans for stronger borrowers and raise the risk of default among weaker ones, including software companies facing competitive pressure from artificial intelligence.
This article was written by Eamonn Sheridan at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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