I’ve been tracking shareholder flows in evergreen funds for several quarters now, and was finally able to get all three groups in one spot.
Today’s update covers 220 funds:
65 non-listed BDCs
100 private credit interval and tender-offer funds
55 private equity, venture/growth, and secondaries interval and tender-offer funds
The difference between private credit and private equity will hit you between the eyes as soon as you scroll down to the PE table (for lack of a better option, I present to you not one, not two, but three multi-page tables. Don’t hate me).
Redemption requests get the headlines. But lately I’m more interested in what’s happening on the other side of the ledger: new subscriptions.
Private credit investors are increasingly asking for their money back (“duh, Leyla”). Private equity investors, for the most part, are still coming in. There is very likely some rotation going on (Stanger calls it “a rotation, not a retreat”), but we can’t trace those dollars to confirm whether they are, indeed, the same dollars.
One more thing:
Across credit interval funds, new sales have fallen by more than half over the past three quarters, while redemptions have climbed sharply. Some funds are still growing. Others are meeting every redemption request and nevertheless losing capital.
And some investors are discovering that requesting liquidity and receiving cash are two different things (redemption PIK, if you will—more on that below).
If you’re new to evergreen fund liquidity, start here:
Let’s look at the data.
Non-listed BDCs: it’s now a fundraising problem
According to Stanger, Q2 was another record quarter for non-listed BDC redemption requests. Investors requested 12.4% of NAV, up from 10.4% in Q1.
Managers fulfilled just 38% of requests, returning $5.9 billion to shareholders. Meanwhile, new fundraising fell 82% year over year to $2 billion, its lowest quarterly level since 2020.
Are you doing the math? NO? Fine, that equals roughly $4 billion in net outflows. And this was the second consecutive quarter of net outflows. Here’s the breakdown by fund for non-listed BDCs (there are 5 pages, btw; use the arrow on the bottom right):
Look at the largest funds.
Blue Owl Credit Income (OCIC): 18.7% of NAV requested; 27% fulfilled.
Apollo Debt Solutions (ADS): 16.8% requested; 30% fulfilled.
Ares Strategic Income (ASIF): 14.6% requested; 35% fulfilled.
Blackstone Private Credit (BCRED): 10.1% requested; 49% fulfilled.
And then there’s Blue Owl Technology Income (OTIC): investors requested redemptions equal to 37.6% of NAV. The fund fulfilled just 13%.
Now, these funds are generally sticking to the redemption caps (for most, it’s 5%). Of course, you all already know that.
❗️The bigger issue is fundraising.
Private credit portfolios generate liquidity through interest payments, loan repayments, and refinancing. But new subscriptions have historically provided another source of cash.
And that source is drying up. When redemptions remain elevated while fundraising collapses, managers have considerably less room to maneuver.
Private credit interval funds: same problem, different structure
The pressure isn’t limited to BDCs.
I collected Q2 data for 100 private credit interval and tender-offer funds, representing approximately $93 billion in NAV.
Some of the largest are experiencing redemption demand comparable to the BDCs, but sort the net flows column and you’ll see how bifurcated the results are: