Apollo, Blackstone and Morgan Stanley are all capping withdrawals from their wealth-channel credit funds at levels far below investor demand. A newer Goldman Sachs fund is still pulling in fresh money, which may say more about fund age than manager quality.
For most of this year, redemption limits at non-traded private credit funds looked like isolated events at individual managers. With Apollo's latest disclosure, they look more like a pattern.
Apollo Debt Solutions BDC told shareholders this week that investors asked to redeem 14.7% of the fund's shares in the third quarter, against a standing quarterly repurchase cap of 5%. That was down from 16.8% in the second quarter but up from 11.2% in the first, and it marks the third straight quarter the fund has limited withdrawals. Apollo expects about $700 million of gross outflows in the quarter against roughly $200 million of new subscriptions, for net outflows of about $500 million, or 3% of net asset value. Year-to-date gross inflows stand at about $1.3 billion, or 9% of NAV.
Apollo is not alone. Blackstone's BCRED received third-quarter repurchase requests estimated at about 10% of shares, roughly $4.3 billion, against its own 5% cap. Morgan Stanley's North Haven Private Income Fund, a roughly $7 billion vehicle, saw requests equal to 11.4% of NAV against a 5% cap, after 11.6% in the second quarter, its third consecutive quarter of limits.
Put side by side, the three funds are running redemption demand at roughly two to three times what their structures allow them to pay out. Each is honoring its cap, which is how these vehicles are designed to work. The quarterly limit exists precisely so a fund holding illiquid loans is never forced to sell them at a discount to meet withdrawals. But the persistence of the gap across three of the largest platforms raises a harder question than any single fund's quarter: whether the semi-liquid structure sold to wealthy individuals is now structurally mismatched with how much liquidity those investors actually want.
The counterexample is instructive. Goldman Sachs Private Credit Corp. sold about $93 million of new Class I shares and nearly $1 million of Class S shares in the period through August 31, according to a filing this week. The fund reports net asset value of about $9.6 billion, or $24.60 a share, leverage of 0.9 times, and an August distribution that annualizes to a 9.0% yield on Class I shares.
The Goldman fund is a newer vehicle than the three gated funds, and that may be the whole explanation. Investors in newer funds are often still inside their early holding periods and have not yet reached the point where large numbers want out. If that reading is right, the gating seen at Apollo, Blackstone and Morgan Stanley is a feature of fund maturity that newer vehicles will eventually meet too. If it is wrong, and Goldman's investor base simply behaves differently, the pressure may be more specific to certain platforms.
For investors in the category, the practical point is that the quarterly cap is working as designed while also turning a notionally liquid product into a queue. Anyone allocating to these funds should assume that getting money out in a stressed period may take several quarters, and that the queue at the largest funds has not yet shown a clear sign of clearing.