Private Credit and its Panic Investors

Following Cliffwater, BlackRock and Blackstone, it’s Apollo Global Management’s turn to impose restrictions on investor withdrawals from one of its largest investment vehicles, reinforcing concerns that the private credit industry is entering a period of intense pressure. Apollo announced that it is tying up its Apollo Debt Solutions (ADS) holdings, limiting buyouts to 5% of total assets, despite investors asking to withdraw 16.8% of their funds in the second quarter of 2026. The percentage is impressive. Nearly one in six investors attempted to leave the fund within three months, with total withdrawal requests approaching $2.4 billion. What is even more worrying is that the situation is getting worse. By the first quarter of 2026, takeover requests had reached 11.2%, which had already led to the first activation of restrictions. Instead of de-escalating the pressure, withdrawals increased by more than 50% within a few months. This development comes at a time when the private credit market has evolved into one of the fastest growing areas of global capital management. In recent years, large private equity firms have attracted huge sums from institutional as well as private investors, promising high returns through direct corporate loans outside the traditional banking system. However, the slowdown in the economy, high interest rates and growing doubts about the real value of some portfolios are starting to test the model.

When Non-Liquid Assets Meet Mass Withdrawals

The basic problem of private credit is structural. Most funds invest in unquoted corporate loans that cannot be easily sold on the market. At the same time, however, these products have been promoted in recent years to wealthy private investors as investments that offer relatively easy access to liquidity through regular redemption windows. As long as capital inflows are larger than outflows, the model works without problems. But when investors start to massively demand their money back, managers are confronted with the classic problem of a mismatch between liquidity and investment assets. That’s exactly what’s happening today. Apollo is not the only one forced to protect its liquidity. BlackRock recently cut withdrawals from BCRED, the world’s largest private retail credit fund, to about $79 billion. Similar measures were taken by Cliffwater, when investors asked to withdraw about 17% of its funds. At the same time, Swiss Partners Group warned that it might also move forward with acquisition restrictions if the wave of withdrawals continues. Developments are reminiscent of the first signs of pressure on other investment categories before previous financial turbulences.

Reflecting on tech companies

Concerns about loan portfolios linked to technology and software companies are particularly acute. For years, private credit funds have aggressively funded SaaS companies, assuming that recurring revenues ensure stable cash flows. However, slowing growth in the sector and valuation pressures are raising questions about the real value of these loans. If valuations are revised lower and impairments increase, then pressure on investors may intensify even further. Apollo management has sought to reassure the market, stressing that net outflows remain manageable and account for only 3% of the net asset value since the beginning of the year.