Ares Management ARES-N on Tuesday became the latest alternative asset manager to cap investor withdrawals at a private credit fund after a surge in redemption requests.
Investors in Ares’ US$22.7-billion Ares Strategic Income Fund (ASIF) sought to withdraw 11.6 per cent of the outstanding shares in the first quarter, according to a regulatory filing. The fund said it plans to accept requests for 5 per cent of the shares, or US$524.5-million.
The move mirrors similar recent decisions by rival private capital firms to cap redemptions at the 5-per-cent limit, including Apollo Global APO-N and BlackRock’s BLK-N HPS Corporate Lending Fund. Some managers, including Blackstone BX-N, have chosen to buy back more than 5 per cent.
Many on Wall Street have drawn parallels to the redemption wave that hit non-traded U.S. real estate income trusts a few years back, when valuation jitters spooked some investors.
ASIF said in a letter to shareholders that most of the requests to withdraw money “were made by a limited number of family offices and smaller institutions in select geographies,” which it said represents less than 1 per cent of the fund’s more than 20,000 shareholders.
The decided withdrawal limit “aligned with what we believe are the best interests of the fund and all of our stakeholders,” the letter said.
Shares in Ares, which managed roughly US$623-billion in assets at the end of 2025, fell 1 per cent in morning trading. The stock has plunged roughly 35 per cent so far this year.
ASIF, which was launched in 2022 and focuses on illiquid private credit investments, said that no loans in its portfolio were on non-accrual status, meaning no interest payment was due past 30 days or more.
The fund, which had gross inflows of roughly US$708-million in the first quarter, maintains significant liquidity, including about US$5-billion in undrawn capacity across committed debt facilities.
“We believe periods of market dislocation have historically created some of the most attractive opportunities in direct lending,” ASIF said in the letter, adding that it was well-positioned to capitalize on the disruption.
A reckoning for BDCs?
Non-traded business development companies (BDCs), like ASIF, offer investors quarterly liquidity through a tender offer, typically for 5 per cent of the outstanding shares.
BDCs raise money, predominantly from retail investors, and use it to extend loans to midsized companies, but those loans are typically difficult to divest quickly.
Investors have pulled billions of dollars from such investment vehicles in recent months amid a barrage of negative headlines around the roughly US$2-trillion private credit industry.
Analysts have said the move by asset managers to limit withdrawals at 5 per cent is the right decision as it prevents cash drawdowns or forced asset sales.
“We believe adhering to the cap appropriately balances the interests of new, existing, and redeeming shareholders at (net asset value) NAV,” Piper Sandler analyst Crispin Love said.
Asset managers typically own more liquid securities in the fund as well as undrawn capacity on bank lines to manage redemptions.
Three ways private-credit managers can weather the current crisis
Apollo Global’s US$25-billion private credit fund, Apollo Debt Solutions, also capped redemptions at 5 per cent on Monday after investors sought to withdraw roughly 11.2 per cent of its outstanding shares.
Investment firm Sixth Street said last week the BDC sector was set for a reckoning and could need years to work through the “intense yet warranted reset.”
Analysts say private credit funds are facing their first industry-wide litmus test, and how they navigate the next several quarters will likely shape their relationships with investors for years to come.
“While we expect redemptions to remain elevated over the next few quarters, there is now a healthy precedent for prorating redemptions,” Evercore analyst Glenn Schorr said.
Investment bank RA Stanger, which closely monitors private market investments, said in a market update that business development companies, like ASIF, raised 43-per-cent less from investors in February than in the same month last year.