Apollo private credit fund gives investors only 45% of requested withdrawals
Apollo Global Management Limits Withdrawals in Private Credit Fund
Recently, Apollo Global Management, a prominent asset management firm, made a significant announcement regarding its flagship private credit fund. The firm informed investors that it would be restricting withdrawals for the current quarter to just under half of the total redemption requests received. This decision serves as a clear indication of the challenges and strains faced by the asset management industry.
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In a filing submitted to the Securities and Exchange Commission, Apollo Debt Solutions BDC disclosed that it had received redemption requests amounting to 11.2% of outstanding shares in the first quarter. This figure significantly surpassed the fund’s 5% quarterly cap on withdrawals.
While some players in the private credit sector have relaxed their withdrawal limits to meet investor demands, Apollo has chosen to adhere to the 5% cap, which is considered an industry standard. The non-traded business development company (BDC) anticipates returning approximately $730 million to investors on a prorated basis, resulting in redeeming shareholders receiving around 45% of their requested capital. As of February 28, the fund’s net asset value stands at $15.1 billion.
Apollo emphasized that its decision was driven by a commitment to long-term value creation for the fund’s shareholders. The firm stated, “As long-term stewards of capital, we have a fiduciary duty to act in the best interests of all Fund investors, balancing the interests of shareholders seeking liquidity with those who choose to remain invested.”
Despite a 1.2% decline in the fund’s net asset value per share over the past three months through February 28, Apollo highlighted that it outperformed the U.S. Leveraged Loan Index, which experienced a 2.2% decline during the same period.
The wave of investor redemptions affecting the industry, particularly driven by concerns surrounding private credit loans to software companies, has not spared Apollo. However, the firm has distanced itself from other players by emphasizing its focus on lending to larger and more stable companies. Software companies represent the largest sector, accounting for 12.3% of loans in the Apollo Debt Solutions BDC portfolio.
Overall, Apollo’s decision to limit withdrawals underscores the challenges faced by the asset management industry and the need to balance investor demands with long-term value creation.
