Apollo Global Management (NYSE:APO) has limited withdrawal requests from its non-traded private credit fund Apollo Debt Solutions amidst ongoing turmoil in the private credit sector.
Investors asked to withdraw 16.8% of their shares, but the fund capped withdrawals at 5%, according to a shareholder letter cited by Bloomberg. Most of the requests (12.5%) came from offshore investors, while U.S. customers only accounted for 4.3%.
Last quarter, investors requested to redeem 11.2% of the fund’s shares, which have approximately $25 billion in assets.
Apollo president Jim Zelter told attendees at Bernstein’s Strategic Decisions Conference in New York last month that he expects wealthy clients to continue to seek cash back from private credit products after months of net outflows.
"I don’t think it was a one-shot," he said of the redemption wave.
Zelter warned that redemption pressure could tick higher if some investors try to time the limits. There “may be even a little bit of an increase if people want to game the system,” he said, adding, “we are not through the turbulence yet.”
He added that investor behavior varies by geography and distribution method, with some regions holding up better than others. “We’re learning … who are our longer-term friends and who are the shorter-term tourists,” Zelter said.
Apollo Debt Solutions has produced an 8.1% total net return since inception, Bloomberg added.
Apollo isn’t the only firm to have received numerous withdrawal requests driven by concerns about the private credit sector.
The flagship private credit fund of Cliffwater LLC capped redemptions at 5% in Q2 after investors sought to redeem approximately 17% of the fund’s shares.
Partners Group is restricting investor withdrawals from its $8.6 billion Global Value SICAV fund after redemption requests exceeded 5% of the net asset value, a move that rattled sentiment across private markets.
The firm pointed to instability across open-ended vehicles since early last year, beginning in private credit and later affecting private equity, Reuters reported.
BlackRock, Ares Management, JPMorgan and Morgan Stanley have capped redemptions, as well.
Photo: Image by Piotr Swat via Shutterstock
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