Marc Rowan, CEO of Apollo Global Management, during an interview with Bloomberg Television on December 5, 2023 in New York.
Jeenah Moon | Bloomberg | Getty Images
Apollothe asset management giant, told investors in its flagship private credit fund that it would limit withdrawals to just under half of applications this quarter, the latest sign of stress in the asset class.
In a filing late Monday with the Securities and Exchange Commission, Apollo Debt Solutions BDC said the company received redemption requests representing 11.2% of outstanding shares in the first quarter, well above the fund’s 5% quarterly limit.
Unlike some other private loan providers, Apollo adheres to the 5% cap, an industry standard that competes with other providers Blackstone have recently relaxed to meet investor demand for their funds.
The vehicle – a privately traded business development company (BDC) – expects to return approximately $730 million to investors on a pro rata basis, meaning returning shareholders will receive approximately 45% of the capital they requested. The fund had a net asset value of $15.1 billion as of February 28.
“Today’s decision reflects our continued commitment to creating long-term value for the fund’s shareholders,” Apollo said. “As long-term stewards of capital, we have a fiduciary duty to act in the best interests of all fund investors and balance the interests of shareholders seeking liquidity with those who choose to remain invested.”
Apollo said the fund’s net asset value per share fell 1.2% in the three months ended Feb. 28, but outperformed the U.S. Leveraged Loan Index, which fell 2.2% over the same period.
The withdrawals show that Apollo has not escaped the onslaught of investor redemptions plaguing its rivals, sparked by concerns about private credit lending to software companies. Apollo executives have recently tried to distance themselves from other players by saying the company typically lends to larger, more stable companies.
According to the company, software is the largest single sector in the Apollo Debt Solutions BDC, accounting for 12.3% of loans.
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