Key Takeaways
- • Barings Private Credit Corp capped quarterly withdrawals at 5% of shares after investors sought to redeem 11.3% of shares in the first quarter, according to a regulatory filing made public on Monday, April 6.
- • The fund will fulfill roughly 44.3% of each shareholder's repurchase requests, meaning redemption demand was more than double the 5% tender limit.
- • Most large managers, including Apollo Global, Blue Owl, Ares Management and BlackRock, also capped first-quarter withdrawals at 5%, making this part of a broader industry pattern.
- • Non-traded vehicles tracked by Robert A. Stanger returned a record $7.4 billion to investors in the first quarter as of April 2.
- • Analysts have supported the caps as a way to limit forced asset sales and large cash drawdowns in funds holding illiquid loans.
Summary
Barings capped withdrawals at 5% of shares from its private credit fund, Barings Private Credit Corp, after a surge in redemption requests, according to Reuters. A regulatory filing on Monday showed investors sought to pull 11.3% of shares in the first quarter. The fund will fulfill roughly 44.3% of the repurchase requests from each shareholder.
The move is part of a broader pattern. Reuters reports that the majority of major asset managers, including Apollo Global, Blue Owl, Ares Management and BlackRock, capped first-quarter withdrawals at 5%. Bloomberg separately reported that two Blue Owl private credit funds imposed similar caps after redemption requests. Reuters characterizes the pressure as a first litmus test for private credit funds, with retail investors seeking exit amid concerns over transparency, valuations and artificial intelligence-related disruption.
Reuters draws a comparison to the wave of redemption requests that hit non-traded real estate investment trusts beginning in late 2022, when valuation concerns unsettled investors. Non-traded funds like Barings Private Credit offer quarterly liquidity through tender offers, typically capped at up to 5% of shares, and usually invest in illiquid loans that are difficult to sell.
Data from investment bank Robert A. Stanger show such vehicles returned a record $7.4 billion to investors in the first quarter as of April 2. Some market participants argue that periods of high redemptions are a feature of semi-liquid structures rather than a flaw. Analysts have backed the withdrawal caps as reducing the risk of large cash drawdowns or forced asset sales.
In a shareholder letter, Barings Private Credit said: "As market conditions evolve, we expect differences in performance across managers to become more pronounced given that long-term results are driven in part by the importance of underwriting quality, portfolio construction, and balance sheet management."
The move is part of a broader pattern. Reuters reports that the majority of major asset managers, including Apollo Global, Blue Owl, Ares Management and BlackRock, capped first-quarter withdrawals at 5%. Bloomberg separately reported that two Blue Owl private credit funds imposed similar caps after redemption requests. Reuters characterizes the pressure as a first litmus test for private credit funds, with retail investors seeking exit amid concerns over transparency, valuations and artificial intelligence-related disruption.
Reuters draws a comparison to the wave of redemption requests that hit non-traded real estate investment trusts beginning in late 2022, when valuation concerns unsettled investors. Non-traded funds like Barings Private Credit offer quarterly liquidity through tender offers, typically capped at up to 5% of shares, and usually invest in illiquid loans that are difficult to sell.
Data from investment bank Robert A. Stanger show such vehicles returned a record $7.4 billion to investors in the first quarter as of April 2. Some market participants argue that periods of high redemptions are a feature of semi-liquid structures rather than a flaw. Analysts have backed the withdrawal caps as reducing the risk of large cash drawdowns or forced asset sales.
In a shareholder letter, Barings Private Credit said: "As market conditions evolve, we expect differences in performance across managers to become more pronounced given that long-term results are driven in part by the importance of underwriting quality, portfolio construction, and balance sheet management."
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.