Ares and Apollo, two of the largest private credit firms, have limited withdrawals from their funds amid a surge in redemption requests, marking the latest signs of stress in the asset class.
Ares Strategic Income Fund, with a net asset value of $10.7 billion, received redemption requests totaling 11% of its shares in the first quarter. The firm capped payouts at 5%, allowing only $524.5 million of the $1.2 billion requested. The fund saw $708 million in inflows during the quarter, resulting in a net gain of $184 million. Ares attributed the decision to the fund's design and emphasized its ability to deploy capital effectively.
Apollo Debt Solutions BDC, a $15.1 billion private credit fund, also faced redemption requests equal to 11.2% of its shares. The firm limited withdrawals to 5%, returning about $730 million to investors, or roughly 45% of the requested amount. Apollo defended the decision as necessary to balance liquidity needs with long-term value creation. The fund's net asset value per share declined 1.2% over the past three months but outperformed the U.S. Leveraged Loan Index.
Both firms cited concerns over the underlying quality of private credit loans, particularly in the software sector, as driving investor anxiety. Ares noted that a limited number of family offices and smaller institutions accounted for the majority of redemption requests. Apollo, meanwhile, emphasized its focus on lending to larger, more stable companies to differentiate itself from rivals.
The moves come as other major private credit firms, including Blackstone and Blue Owl, have also faced significant redemptions. Industry observers point to broader concerns about liquidity in semi-liquid retail strategies and overexposure to volatile sectors as contributing factors.