Investors ramp up bids to exit private credit as managers slow the taps

Demand from investors trying to get money out of private credit vehicles accelerated in the second quarter, even as the amount fund managers were willing to hand back shrank.

According to data from investment bank Robert A. Stanger, withdrawal requests from widely held private credit funds reached $15.6 billion in the second quarter, up from roughly $13.9 billion in the first three months of the year.

The data, reported by the Wall Street Journal, shows that fund managers returned just $5.9 billion to investors over the period, a drop from the $7.4 billion paid out in the prior quarter.

The gap points to two shifts underway in the business development company sector. Retail investors are increasingly realizing that exiting these vehicles takes far longer than getting into them, pushing more to request withdrawals.

Meanwhile, fund managers are preparing for an extended stretch of heavy redemptions. Blackstone, which met all redemption requests in the first quarter, has since capped withdrawals at 5% to protect capital for future demand.

Requests jumped across most major managers, including Apollo Global Management, Ares Management and BlackRock's HPS credit arm, all of which had been relatively insulated earlier in the year.

Blue Owl, long the largest seller of these funds to individual investors, saw requests ease slightly to 19% of shares outstanding from 22%, still the highest ratio among its peers. Oaktree Capital Management bucked the trend, with requests falling to 4.5% of shares from 8.5%, helped by rising net asset value and a clean loan book.

New fundraising across the industry also stalled, with just $500 million raised in May, the weakest month in at least a year and a half and roughly 75% below already soft January levels.

Infrastructure needs improvement

Eric Needleman, head of Apollo Capital Solutions, argues the asset class needs the kind of infrastructure that eventually matured other credit markets.

Standardized data, active secondary trading and daily pricing, he wrote, are what allow investors to know what their holdings are worth and trade them with confidence. Apollo says its secondary desk has handled more than $13 billion in trading volume since 2025 and expects its entire $830 billion-plus credit book to carry daily pricing by the end of September.

In a report, Needleman wrote: "Private credit has earned its place as one of the world's most important asset classes, but the infrastructure hasn't caught up. We believe it is better to lead its modernization rather than react to it."

If inflows stay depressed, lending capacity across the sector could tighten, adding pressure to the lower-rated borrowers that rely on private credit the most.