Apollo Global Management Inc. has restricted redemptions from a major private credit fund marketed to retail investors, becoming the latest alternative asset manager to address a sharp increase in withdrawal requests.
A letter sent to investors disclosed that on Monday, the $25 billion business development company (BDC), Apollo Debt Solutions, capped redemptions at 5%, while client withdrawal requests had reached 11.2%.
Given the cap, investors seeking to redeem their holdings will temporarily receive only about 45% of the amount they requested. The proportion of requested funds returned by Apollo Debt Solutions is lower than that of some peer firms that have also implemented redemption limits.
Earlier this month, BlackRock limited redemptions from its $26 billion unlisted BDC to a predetermined 5% cap, while investor withdrawal requests stood at 9.3%. Morgan Stanley's North Haven Private Income Fund returned a similar proportion of client funds as Apollo after imposing its own restrictions.
In the letter, Apollo indicated that it plans to maintain this redemption cap next quarter to balance the interests of shareholders seeking liquidity with those choosing to remain invested. The firm stated that this challenging period may ultimately benefit investors in the long run, as complex and uncertain times often give rise to some of the most attractive investment opportunities.
BDCs are a category of private credit funds available to retail investors. These funds are experiencing a surge in redemption requests as market concerns grow over risks within the $1.8 trillion private credit market.
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