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-facing 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%.

With only about 45% of redemption requests 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 applying for 9.3% of shares. Morgan Stanley’s North Haven Private Income Fund has a redemption ratio similar to Apollo’s, proportionally distributing redemptions.

In the letter, Apollo stated that it will maintain the same redemption limit in the next quarter to “balance the needs of liquidity-seeking shareholders and those choosing to continue holding,” and noted that challenging periods may be beneficial for investors in the long run. Complex and uncertain times often present the most 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 restrict redemptions to 5% of outstanding shares, recent cautious retail sentiment has tested fund managers’ flexibility. Some institutions, like Blackstone, have chosen to break through the cap to soothe investor sentiment and prevent further outflows.

More assertively, BlackRock recently imposed strict redemption limits on its HPS Corporate Lending Fund. This move was shortly afterward called “completely appropriate” 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 re-priced risk, the fundamentals of the fund’s underlying borrowers remain sound.”

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

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

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