The "Redemption Wave" sweeps through the US private credit industry, with PE giants' stock prices plunging across the board.

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The U.S. private credit market is facing a concentrated liquidity stress test. Ares Management and Apollo Global Management have announced one after another restrictions on redemption requests for their private credit funds, triggering widespread market concern, and the shares of multiple alternative asset management giants fell sharply in response.

On Monday evening, Apollo was the first to disclose that its Apollo Debt Solutions, a commercial development company with $25 billion in scale, would lock its quarterly redemption limit at 5% after investors requested to redeem 11.2% of the shares.

Ares followed immediately. Its Ares Strategic Income Fund, with $10.7 billion in scale, also triggered a 5% redemption cap. Previously, redemption requests for that quarter had risen to 11.6%. The actions by the two companies further intensified market doubts about private credit liquidity.

Hit by the news, Ares and Apollo shares both slid by more than 4% at one point in the New York session on Tuesday. Peers such as TPG, Blackstone, KKR, and Blue Owl Capital also fell across the board, and the financials sector index recorded its largest intraday decline of up to 0.8%. Since the start of this year, the shares of multiple alternative asset management companies have already cumulatively fallen by more than double digits.

As the redemption wave spreads, multiple giants “close the gates”

This round of redemption pressure is not an isolated incident, but rather a concentrated outbreak of an industry-wide wave. According to Bloomberg, earlier this month, Morgan Stanley, Cliffwater LLC, and BlackRock had already imposed redemption limits on private credit funds with billions of dollars under management. Ares and Apollo are simply the latest to follow suit.

In the first quarter of this year, the tracked related funds received a total of $13 billion in redemption requests. The total size of the investment portfolios managed by these funds is about $211 billion. At present, funds have paid out only about two-thirds of the requests, and there are $4.6 billion in redemption requests still pending.

Taking Ares Strategic Income Fund as an example, the fund received $1.2 billion in redemption requests in the first quarter, but ultimately paid out only $524 million—about two-fifths of the total requested amount. Ares attributed the redemption pressure to “a minority” of family offices and small- and mid-sized institutional investors, saying they account for less than 1% of its more than 20,000 investors, but the assets held by this group exceed 11% of the fund’s total size. It is worth noting that in the same period, the fund still recorded $708 million in net subscriptions, so its asset size showed no contraction; however, analysts generally expect the momentum of new inflows to have already peaked.

Behind the redemption wave lies investors’ continuing concern about private credit market lending practices and their exposure to industries that are sensitive to the impact of artificial intelligence. Mark Malek, Chief Investment Officer at Siebert Financial, pointed out in a report to clients that Apollo’s document disclosures show a clear gap between its public narrative and its actual portfolio exposure, with the software industry remaining its largest holding segment. “This kind of gap, at a moment when confidence is most critical, will precisely damage confidence,” he wrote.

Liquidity illusions are being questioned, and debate over systemic risk is intensifying

The concentrated appearance of redemption limits has brought the long-standing structural liquidity mismatches in the private credit market into the spotlight. These non-traded private credit funds, which are issued to retail and high-net-worth investors, fundamentally hold underlying assets with relatively low liquidity, yet they provide investors with a comparatively flexible exit channel through quarterly redemption mechanisms. When redemption pressure surges, the mismatch between the two becomes concentrated and visible.

As to whether this bout of volatility signals deeper underlying risks, there is clear disagreement in the industry. Financial figures such as Jamie Dimon, CEO of JPMorgan Chase, and Lloyd Blankfein, former CEO of Goldman Sachs, have compared the current turmoil in the private credit market with the situation on the eve of the 2008 global financial crisis.

But there are also voices objecting to this comparison. Mark Malek said, “This is not a 2008-style systemic banking industry crisis, because private credit, to a large extent, operates outside the traditional deposit-funding bank system. The more core issue lies in valuation, transparency, and the fact that this asset class has never truly been liquid while manufacturing a liquidity illusion.”

From the perspective of longer-term impacts, the spread of redemption limits has begun to weigh on the industry’s overall fundraising outlook. Analysts expect that incremental fundraising from institutions such as Blackstone, Ares, and Blue Owl for high-net-worth individuals will slow down markedly, and this channel has long been one of the key drivers of industry growth. At the same time, the private credit industry is actively lobbying regulators to open up access to private investments through 401k retirement plans, and this current liquidity turmoil may make the advancement of related policies more complicated.