Key Takeaways
- • Business Insider found that private-credit redemption requests, previously attributed mainly to retail investors, have spread to smaller institutions, pensions, foundations, and family offices.
- • Fifteen institutional investors accounted for 17% of the $4.3 billion in redemption requests from Blue Owl's Credit Income fund, a non-traded BDC, according to a person familiar with the figures.
- • A Business Insider review of 49 pensions, foundations, or endowments found at least $3 billion invested in BDCs, including $2.7 billion in equity and $311 million in investment-grade bonds, likely an undercount.
- • Industry leaders describe the outflows as driven by larger allocators: Blackstone CEO Jon Gray said the redemption wave reflects "bigger boulders" rather than small retail investors, while Ares said most of its redemptions came from smaller institutions and family offices.
- • Institutional exposure remains small relative to the market, but some allocators are trimming: Maine PERS is reducing its publicly traded BDC holdings, and Octus CEO Kent Collier said some pensions have lowered planned private-credit allocations.
Summary
Business Insider reports that the exodus from private credit's most strained funds, particularly non-traded business development companies (BDCs), is extending beyond retail investors to smaller institutions. The Columbia, Missouri police and firefighters' retirement fund, which held roughly 1.5% of its portfolio in Blue Owl Technology Income, voted to stop reinvesting dividends from its $3.2 million stake and redirect those payments to a short-term bond manager, according to meeting minutes.
Business Insider's investigation found that fifteen institutional investors accounted for 17% of the $4.3 billion in redemption requests from Blue Owl's Credit Income fund, according to a person familiar with the figures. Ares said a majority of redemptions from its Strategic Income Fund were coming from smaller institutions and family offices rather than retail investors. Earlier, Business Insider reported that investors sought to withdraw $19.5 billion from 17 of these funds in the first quarter, and firms paid out just 53% of requests, or $10.4 billion, amid concerns over software loan exposure and private-market valuations.
Business Insider's review of public disclosures and filings from 49 pensions, foundations, and endowments, including the 10 largest US plans, identified at least $3 billion in these funds. The total is likely understated, since it covers only a fraction of hundreds of US pensions and many individual investment sizes were undisclosed. Columbia Business School finance professor Tomasz Piskorski noted in a recent paper that BDCs hold only about 20% of private credit industry assets. Institutional cracks remain small for now, and Piskorski said some pensions may seek to exit if losses materialize.
Institutional approaches to BDCs have shifted. NEPC's head of private debt, Oliver Fadly, said some clients use public BDCs as short-term bridges, while nonpublic BDCs have offered unique economics for certain investors. The Employees' Retirement System of Rhode Island, with a $14.6 billion portfolio, held almost $39 million in Blue Owl Capital (OBDC) at the end of April and said it is evaluating the position. The Maine Public Employees Retirement System, managing about $21 billion, has been reducing its OBDC holdings, about 6.15 million shares valued at roughly $68.6 million around March 24, while increasing its overall alternative credit allocation to 15%.
Institutional fundraising has continued. BlackRock described institutional fundraising as "stronger" despite redemptions, and Blackstone's Gray called the first quarter "one of our best quarters ever" for raising institutional private-credit capital. CalPERS, which bought loans Blue Owl sold to meet redemptions in February, is increasing its Blue Owl exposure; CEO Marcie Frost said at an April board meeting that the fund does not "need to run scared" during turmoil. CalSTRS lists Blue Owl as its 10th largest manager with $2.9 billion in total exposure, and the State Teachers Retirement System of Ohio holds a $2.3 billion joint venture with Blue Owl's BDCs formed in 2024.
Octus CEO Kent Collier said some funds are reconsidering private-credit exposure, with planned allocations for new commitments coming down. Piskorski warned of potentially lean years for private credit and a non-trivial risk of a broader crisis of confidence.
Business Insider's investigation found that fifteen institutional investors accounted for 17% of the $4.3 billion in redemption requests from Blue Owl's Credit Income fund, according to a person familiar with the figures. Ares said a majority of redemptions from its Strategic Income Fund were coming from smaller institutions and family offices rather than retail investors. Earlier, Business Insider reported that investors sought to withdraw $19.5 billion from 17 of these funds in the first quarter, and firms paid out just 53% of requests, or $10.4 billion, amid concerns over software loan exposure and private-market valuations.
Business Insider's review of public disclosures and filings from 49 pensions, foundations, and endowments, including the 10 largest US plans, identified at least $3 billion in these funds. The total is likely understated, since it covers only a fraction of hundreds of US pensions and many individual investment sizes were undisclosed. Columbia Business School finance professor Tomasz Piskorski noted in a recent paper that BDCs hold only about 20% of private credit industry assets. Institutional cracks remain small for now, and Piskorski said some pensions may seek to exit if losses materialize.
Institutional approaches to BDCs have shifted. NEPC's head of private debt, Oliver Fadly, said some clients use public BDCs as short-term bridges, while nonpublic BDCs have offered unique economics for certain investors. The Employees' Retirement System of Rhode Island, with a $14.6 billion portfolio, held almost $39 million in Blue Owl Capital (OBDC) at the end of April and said it is evaluating the position. The Maine Public Employees Retirement System, managing about $21 billion, has been reducing its OBDC holdings, about 6.15 million shares valued at roughly $68.6 million around March 24, while increasing its overall alternative credit allocation to 15%.
Institutional fundraising has continued. BlackRock described institutional fundraising as "stronger" despite redemptions, and Blackstone's Gray called the first quarter "one of our best quarters ever" for raising institutional private-credit capital. CalPERS, which bought loans Blue Owl sold to meet redemptions in February, is increasing its Blue Owl exposure; CEO Marcie Frost said at an April board meeting that the fund does not "need to run scared" during turmoil. CalSTRS lists Blue Owl as its 10th largest manager with $2.9 billion in total exposure, and the State Teachers Retirement System of Ohio holds a $2.3 billion joint venture with Blue Owl's BDCs formed in 2024.
Octus CEO Kent Collier said some funds are reconsidering private-credit exposure, with planned allocations for new commitments coming down. Piskorski warned of potentially lean years for private credit and a non-trivial risk of a broader crisis of confidence.
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