The private credit market is experiencing liquidity concerns as investors seek to exit funds, with some investors facing discounts of up to 30% on their investments.

Redemption Pressure Mounts

Cox Capital Partners has launched tender offers for shares in non-traded business development companies run by Apollo, Ares Capital, and BlackRock’s HPS Investment Partners, offering to buy them at discounts of 15% to 30% to their May-end net asset values.

The offers are small, at about $31 million combined, but the pricing is telling. Cox is offering Apollo fund investors 70 cents on the dollar, HPS investors 75 cents, and Ares holders 85 cents.

These vehicles typically limit quarterly repurchases to 5% of net asset value. When investors ask for more, withdrawals are prorated, potentially leaving them waiting quarter after quarter.

Broader Concerns

The strain extends beyond private credit. Partners Group said withdrawals from some mature evergreen funds are likely to continue for several quarters after it capped redemptions from an $8.6 billion private-equity fund last month.

Clients pulled $3.8 billion in the first half, with three mature evergreen strategies accounting for 79% of outflows. Partners Group said current trends could trim asset growth by 1% to 2% over 18 months, while outflows from the funds could reach $10 billion to $20 billion in a downside scenario.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.