The scale of the exit rush that rocked private credit funds during the first quarter is now known. According to calculations by the Financial Times, investors attempted to yank more than $20 billion from such funds during the period, as worries mounted over lending to the software industry, a sector hit hardest by recent jitters that AI could render them obsolete.
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Several industry titans were impacted by this dash for the exits, including Blackstone (BX), KKR (KKR), Apollo Global Management (APO), Ares Management (ARES), and Blue Owl Capital (OWL).
According to analysts, other factors that triggered retail investors’ exit push, including for publicly traded private credit funds known as business development companies (BDCs), are loan-value write-downs taken by companies such as JPMorgan Chase (JPM) and BlackRock (BLK) and a string of high-profile dividend reductions at certain BDCs in recent weeks.
Funds Implement Withdrawal Caps to Fight Exit
Earlier, Blackstone was forced to raise its withdrawal cap after investors withdrew a record $3.7 billion from its flagship BCRED private credit fund. Two of Blue Owl Capital’s funds were also hit by a record $5.4 billion in redemption requests, forcing the alternative asset manager to cap withdrawals at 5% of assets.
Banking giant Morgan Stanley (MS) was also not spared and responded with a withdrawal limit after investors sought to dump around 10.9% of its North Haven Private Income Fund. The fund had about $7.6 billion in assets under management at the time, meaning that the redemption request was for about $828.4 million.
Goldman Sachs (GS) has previously contended that the development is only likely to create short-term pressure on the management fees and fee-related earnings of BDCs.
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TipRanks’ Stock Comparison tool shows that Blue Owl Capital (OWL) currently offers the biggest upside, about 68%, among the asset managers and investment-banking companies mentioned in this article. The upside is based on an average price target of $13.96 and a Moderate Buy consensus rating on OWL.
