Apollo Global Management and Ares Global Management have become the latest managers to cap withdrawals from their flagship non-traded BDCs, amid a surge in redemption requests.
Apollo Debt Solutions (ADS) received redemption requests of about $1.6 billion – 11.2% of its $14.7 billion net assets – in its Q1 tender offer, well above the typical 5% quarterly limit in non-traded BDCs.
As a result, the firm opted to cap redemptions at 5%, honoring investor requests on a pro-rated basis – meaning every redeeming investor will receive about 45% of the requested amount.
In an investor letter, Apollo explained its decision to cap redemptions, saying that the firm had 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.”
Shortly afterwards, Ares announced that it would limit redemptions from Ares Strategic Income Fund (ASIF) to 5% for the quarter, after requests surged to 11.6% of the fund’s $10.5 billion in net assets. Redemptions are once again to be pro-rated, with Ares honouring 43.1% of each request.
Ares said in a letter to investors that “the majority of repurchase requests were made by a limited number of family offices and smaller institutions in select geographies,” which it said represented “less than 1%” of the fund’s 20,000 individual shareholders.
Both managers said their funds were performing well. Apollo said that ADS’s portfolio currently has a weighted average interest coverage ratio of 2.5x – up 15% in the past year – with just 2.5% of investment income coming from PIK instruments.
Meanwhile, Ares said ASIF had zero loans on non-accrual status, while its broader portfolio had recorded 14% organic EBITDA growth in the past year.
“We believe these metrics underscore the durability and quality of the portfolio we have built over the last three years,” the manager wrote.
Biggest BDCs see surge in redemptions
Apollo’s decision follows similar moves by BlackRock’s HPS Investment Partners and Morgan Stanley Investment Management, both of whom have gated redemptions from their flagship non-traded BDCs in recent weeks.
While redemptions have increased across the non-traded BDC universe in the past two quarters amid jitters in the broader market, the largest funds – which have attracted the most capital from high net worth clients – have been hit significantly harder than smaller vehicles.
Not all managers have gated funds in response to increased redemption requests. Blackstone, for example, opted to honor all redemption requests from its $82 billion flagship fund, BCRED, in Q1, with investors withdrawing 7.9% of the fund’s net assets.
Meanwhile, Blue Owl, which manages a host of BDCs, has opted for different approaches depending on the fund.
When redemption requests surged for its private wealth-focused Blue Owl Capital Corporation II, the firm opted to suspend all tender offers and instead wind down the fund by selling off its assets. The manager started with a sale of about 30% of the fund’s portfolio to investors including CalPERS and OMERS at 99.7% of par.
However, in another case – that of its tech-focused non-traded BDC, Blue Owl Technology Income Corporation – the firm opted to honor investors’ wishes when they asked to redeem 15.4% of net assets in Q4 2025.
