Apollo Asset Management will return only 45% of the redemption requests submitted by investors for its $15 billion private credit fund.
Key Points: Apollo's $15 billion private credit fund received redemption requests equivalent to 11.2% of its shares, more than double its 5% quarterly limit. The firm will return funds to investors at a rate of just 45% of the requested amounts. Unlike competitors, including Blackstone, which have recently eased redemption restrictions to meet investor demand, Apollo is maintaining its 5% cap, positioning it as a measure to protect asset value. Although Apollo has attempted to differentiate itself from other private credit firms by emphasizing its lending to large, stable companies, the software industry remains the fund's largest allocation sector, comprising 12.3% of its portfolio.
The asset management giant Apollo informed investors in its flagship private credit fund that it will limit redemptions this quarter to less than half of the amount requested, another sign of stress in the asset class. In a filing with the U.S. Securities and Exchange Commission on Monday evening, Apollo Debt Solutions BDC stated it received redemption requests in the first quarter representing 11.2% of its outstanding shares, far exceeding the fund's 5% quarterly redemption limit. Unlike some other private credit firms, Apollo is adhering to its 5% redemption cap. This industry standard has recently been relaxed by competitors, including Blackstone, to meet the demands of their fund investors. The investment vehicle, a non-traded Business Development Company (BDC), is expected to return approximately $730 million to investors on a pro-rata basis. This means shareholders seeking redemptions will receive only about 45% of the funds they requested. As of February 28, the fund's net assets were $15.1 billion. "Today's decision reflects our continued commitment to creating long-term value for fund shareholders," Apollo stated. "As long-term capital managers, we have a fiduciary duty to act in the best interests of all fund investors, balancing the interests of shareholders seeking liquidity with those choosing to remain invested." Apollo reported that the fund's net asset value per share fell 1.2% over the three months ended February 28, but this performance was better than the 2.2% decline in the US leveraged loan index during the same period. This wave of redemptions indicates that Apollo has not been immune to the concentrated investor withdrawals that have troubled its peers. The redemptions are partly driven by market concerns over private credit exposure to loans in the software sector. Apollo executives have recently tried to distinguish the firm from others, stating that it typically lends to larger, more stable companies. According to company data, loans to the software industry account for 12.3% of the portfolio, making it the largest sector allocation for the Apollo Debt Solutions BDC.
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