Two major investment management companies are restricting investor withdrawals from their funds as financial pressures mount across private market investments.
Partners Group, a Swiss alternative asset manager, announced Thursday that withdrawal requests from its funds have increased, while Blackstone implemented limits on withdrawals from its main private credit fund. These moves highlight growing strain in private funding markets.
Sources familiar with the situation indicate Partners is likely to restrict a second major investment pool, coming one day after the company’s stock price dropped significantly following news of fund limitations.
The company reported that withdrawal requests at a $16 billion fund based in Delaware hit 6% of total assets, surpassing the 5% quarterly threshold it permits. When this limit is exceeded, withdrawals must be capped, according to two sources who spoke with Reuters.
Partners Group, which manages approximately $185 billion in assets, attributed the situation to industry-wide instability affecting open-ended evergreen funds. The volatility began in private credit and has expanded into private equity markets. Market participants are examining issues with loans made by private credit funds operated by major asset management firms, questioning valuations, lending practices, and how technology companies will navigate artificial intelligence challenges.
Demonstrating ongoing pressure in private credit markets, Blackstone, the world’s largest alternative asset manager, restricted withdrawals from its primary private credit fund after redemption requests spiked during the second quarter.
The Wednesday announcement from Partners Group about capping redemptions represents one of the first indicators of how stress in private credit markets, which typically provide loans for private equity deals, is expanding to other areas.
Numerous newer unlisted private credit funds, called business development companies, use an evergreen structure that provides investors with periodic opportunities to withdraw their money at scheduled intervals.
“Evergreen is a difficult proposition to fulfill,” stated Virinchi Narayan, managing director of Dubai-based Three Pins Capital Limited.
“The best approach for these funds has always been and continues to be closed-ended structures. Easy money and the promise of expanding the investor base has provoked a diversification into evergreen and redemption-driven structures — because investors asked for these.”
Withdrawal periods for major U.S. non-traded private credit funds closed last Friday for the second quarter, with industry observers monitoring redemption request rates closely.
Cliffwater became the first to announce that withdrawal requests at its primary $31.3 billion private credit fund increased to 17% in the second quarter, up from 14% in the first quarter.
Investors in the $79 billion Blackstone Private Credit Fund sought to withdraw 10% of shares during the second-quarter offering, compared to 7.9% in the prior quarter.
Different from the previous quarter when Blackstone and staff members invested to fulfill all redemption requests, the fund restricted withdrawals to 5%, which is the standard limit for these investment vehicles.
“BCRED’s structure is a fundamental feature, with investors exchanging some liquidity at times for long-term outperformance,” the company said in a statement.
Partners Group announced Wednesday it had restricted withdrawals from its $8.6 billion private equity fund after redemption requests at the Luxembourg-based Partners Group Global Value SICAV reached 9.8% of assets.
Three additional established evergreen funds, totaling $9.7 billion and primarily from institutional investors, are projected to experience redemptions ranging from 3.5% to 5%, Partners Group reported Thursday.
The company stated that anticipated new client demand could reach $26 billion to $32 billion by 2026, backed by “a large and visible pipeline of fundraising opportunities across mandates, evergreens and traditional closed-ended programmes.”
This announcement helped Partners Group shares recover partially after dropping 16% to a six-year low on Wednesday.
The decline in Partners Group stock affected European competitors on Wednesday, including Sweden’s EQT, CVC Capital Partners and Bridgepoint Group. In the United States, shares of asset managers Blackstone, KKR, TPG and Ares Management also declined.
Stock prices rebounded Thursday, with Blackstone rising 7%.
