Key Takeaways
- • Partners Group Holdings AG capped withdrawals from its $8.6 billion Global Value SICAV evergreen fund, which is aimed at wealthy individual investors, after redemption requests reached nearly 10% of net assets against an automatic 5% gate.
- • Partners Group shares fell more than 17% on Wednesday, while EQT AB and CVC Capital Partners Plc each slipped more than 6%, showing the signal effect of the gate on listed alternative asset managers.
- • CEO David Layton said the fund has ample cash to meet higher redemptions but its mandate is to keep investing in deals, and he attributed part of the pressure to spillover from private credit.
- • Wealth-channel evergreen funds account for little more than 5% of private equity fund assets, versus nearly 15% of private credit money from retail-friendly funds, limiting systemic exposure according to Bloomberg Opinion.
- • Partners Group is more dependent on private bank clients than most rivals, with almost 20% of its money from that source, and it had weaker first-quarter net inflows after its April short-seller attack by Grizzly Research.
Summary
Partners Group Holdings AG has capped withdrawals from its Global Value SICAV, an evergreen private equity fund with roughly $8.6 billion in assets aimed at wealthy individuals, according to a Bloomberg Opinion column by Paul J. Davies. Redemption requests reached nearly 10% of net assets, but the fund's automatic stop is set at 5%, so investors will queue for payment in future quarters. The fund holds ample spare cash and could have met higher redemptions, but CEO David Layton said its mandate is to keep investing in deals and it needs that liquidity. Layton told Bloomberg TV that "some of the redemption pressure that started in private credit has started to make its way over into other asset classes."
The gate weighed heavily on markets. Partners Group shares declined more than 17% on Wednesday, while EQT AB and CVC Capital Partners Plc each slipped more than 6%. The column notes that Partners Group is an outlier among large managers, drawing almost 20% of its money from private banks' wealth clients, and that it first launched permanent private equity funds for the wealthy roughly 20 years ago.
The firm also faces company-specific pressures. Its net inflows were relatively weaker in the first quarter, partly due to deteriorating performance, according to analysts. In April, short-seller Grizzly Research alleged the firm was mismarking assets, which Partners called defamatory and misleading. Citigroup analysts wrote that the concerns seemed mostly overdone, citing consistent third-party valuation audits and a record of selling businesses close to existing marks. Layton acknowledged the short attack had not helped investor sentiment.
The column argues the broader risk is smaller for private equity than for private credit. Most private equity capital comes from large institutions that have committed money for years, and bank exposure is mostly secured against institutional investment commitments, unlike bank leverage in private credit. Selling businesses is harder than selling property or repaying private loans, which the column says has been especially true in recent years. Davies concludes that the gate is bad news for Partners Group and not great for the industry, but matters much less for the wider market. Investors may also be seeking liquidity to participate in forthcoming large listings, including SpaceX and other AI companies, according to the column's analysis of motivations, which it describes as unclear.
The gate weighed heavily on markets. Partners Group shares declined more than 17% on Wednesday, while EQT AB and CVC Capital Partners Plc each slipped more than 6%. The column notes that Partners Group is an outlier among large managers, drawing almost 20% of its money from private banks' wealth clients, and that it first launched permanent private equity funds for the wealthy roughly 20 years ago.
The firm also faces company-specific pressures. Its net inflows were relatively weaker in the first quarter, partly due to deteriorating performance, according to analysts. In April, short-seller Grizzly Research alleged the firm was mismarking assets, which Partners called defamatory and misleading. Citigroup analysts wrote that the concerns seemed mostly overdone, citing consistent third-party valuation audits and a record of selling businesses close to existing marks. Layton acknowledged the short attack had not helped investor sentiment.
The column argues the broader risk is smaller for private equity than for private credit. Most private equity capital comes from large institutions that have committed money for years, and bank exposure is mostly secured against institutional investment commitments, unlike bank leverage in private credit. Selling businesses is harder than selling property or repaying private loans, which the column says has been especially true in recent years. Davies concludes that the gate is bad news for Partners Group and not great for the industry, but matters much less for the wider market. Investors may also be seeking liquidity to participate in forthcoming large listings, including SpaceX and other AI companies, according to the column's analysis of motivations, which it describes as unclear.
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