Ares private credit fund sees redemptions ease as withdrawal pressure moderates
Withdrawal requests from Ares Management's flagship private credit fund fell in the third quarter, providing another indication that redemption pressure across the private credit market may be beginning to moderate, according to a sport by Reuters.
Withdrawal requests to Ares Management's $22.7 billion Ares Strategic Income Fund (ASIF) decreased in the third quarter, indicating that redemption pressure on private credit funds may be easing, according to a report by Reuters. ASIF investors sought to withdraw 13.1% of their shares during the latest quarterly tender offer, a 1.3 percentage point drop from the previous quarter.
The fund permits a maximum of 5% redemptions per period, meaning the majority of withdrawal requests will be fulfilled in subsequent tender offers. Similar declines have been reported by other private credit funds, with BlackRock and Apollo Global Management also experiencing reduced redemption requests. Non-traded private credit funds have been facing increased withdrawal demands from wealthy individuals, who are concerned about underwriting standards and the ability of heavily indebted software companies to withstand AI-related disruptions.
ASIF stated that a large portion of the latest redemption requests came from investors who had submitted requests in earlier periods. New withdrawal requests, after accounting for repeat submissions, amounted to approximately 3% of the fund's net asset value. ASIF expects most outstanding requests to be fulfilled by year-end if redemption demand remains steady.
Class I shares of ASIF have delivered an annualized total return of 9.97% since inception, surpassing the 161-basis-point return of broadly syndicated bank loans.
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