Apollo Faces Redemption Requests Totaling 11%, Limits Withdrawals for One of Its Private Credit Funds

Apollo Global Management is under pressure due to a surge in redemption requests, becoming the latest alternative asset management giant to impose restrictions. The company is limiting redemptions for one of its largest retail-focused private credit funds.

According to a letter to shareholders, this $25 billion BDC—Apollo Debt Solutions—restricted redemptions to 5% of issued shares on Monday, while investor redemption requests reached as high as 11.2%.

Since only about 45% of redemption requests were fulfilled, Apollo Debt Solutions returned less capital to investors compared to some peers also implementing redemption limits.

In comparison, BlackRock earlier this month set a 5% redemption cap for its $26 billion private BDC, with investors redeeming 9.3%. Morgan Stanley’s North Haven Private Income Fund, which distributes redemptions proportionally, is similar to Apollo.

In the letter, Apollo stated that it will maintain the same redemption cap next quarter to “balance the needs of liquidity-seeking shareholders and those choosing to continue holding,” and noted that challenging times could be beneficial for investors in the long run. Complex and uncertain periods often present attractive investment opportunities, provided there is flexibility to act decisively.

Business Development Companies (BDCs) are a type of private credit fund aimed at retail investors. Recently, concerns over lending standards in this $1.8 trillion market and exposure to companies vulnerable to AI disruptions have led to a wave of redemptions.

Although these funds typically limit redemptions to 5% of issued shares, recent cautious retail sentiment has tested fund managers’ flexibility. Some institutions, like Blackstone, have chosen to break the cap to soothe investor sentiment and prevent further outflows.

More assertively, BlackRock earlier restricted redemptions for its HPS Corporate Lending Fund. This move was shortly afterward called “completely correct” by Apollo co-president John Zito.

Apollo also stated that Apollo Debt Solutions achieved about 1% return over the past three months, while its net asset value (NAV) declined by 1.2% during the same period.

The company said, “Although the market has repriced risk, the fundamentals of the fund’s underlying borrowers remain sound.”

Apollo expects that redemptions approved this quarter will result in approximately $730 million in outflows, roughly offset by about $724 million in inflows during the same period.

Over the past month, Apollo Debt Solutions has been strengthening liquidity reserves, including doubling its credit line to $1 billion and signing a new $500 million financing arrangement.

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