LONDON, June 5 - Stresses within the private credit market are beginning to spread into the private equity arena, as lenders that traditionally bankroll buyouts and other private equity transactions face mounting withdrawal pressure from investors.
Swiss asset manager Partners Group, which manages about $185 billion, capped redemptions this week after reporting elevated requests to withdraw from its funds and saying it has been affected by volatility stemming from private credit. The instance underlines how strains that had been largely contained within credit linkages are now touching equity assets and the managers that run them.
Until recently, episodes of stress in private markets had been relatively isolated to specific equity situations - for example the outcome involving software company Medallia, which private equity firm Thoma Bravo reportedly handed back to lenders. But the spillover from credit into equity valuations is becoming more visible, with a fall in Partners Group shares filtering through to other asset managers in Europe and the United States and reflecting broader investor skepticism about the asset class.
Like many private investment firms, Partners Group faces headwinds to its previous rapid growth trajectory as rising investor caution about valuations, transparency, and liquidity in private markets weighs on its outlook. Concerns about the firm's performance had reportedly been building for months, with particular attention on its evergreen funds - products designed to let clients access capital more easily than traditional closed-end structures.
Redemption pressure across private credit funds has remained elevated into the second quarter of 2026. Blackstone's private credit vehicle limited withdrawals to 5% after investors sought to redeem roughly 10% of outstanding shares. In a similar move, Cliffwater's $31.3 billion fund faced redemption requests totaling 17%, and also imposed a 5% cap on outflows.
These measures follow roughly $7.1 billion in redemptions across eight major private vehicles in the first quarter, underscoring a persistent appetite among some investors to pull capital from private market strategies. At the same time, U.S.-focused direct lending issuance plunged 40% to $44.76 billion in the second quarter of 2026, reflecting a marked slowdown in new loan origination for the segment.
Industry data point to subdued fundraising and elevated redemption requests, signaling a cautious phase for managers and investors in the private credit ecosystem. That environment could squeeze earnings for private credit managers by constraining asset growth and reducing transaction fee opportunities, particularly as funds retain more cash to meet withdrawal demands.
What this means
- Private credit managers are confronting both redemption flows and lower new issuance, which may limit fee-generating activity.
- Asset managers with exposure to private markets can see share-price weakness when redemption pressures become visible, affecting peers across regions.
- Reduced issuance in direct lending signals a pause in supply of new loans that traditionally support private equity financing.
Data points preserved from reports
- Partners Group manages about $185 billion and has capped redemptions after increased withdrawal requests.
- Blackstone's private credit fund capped withdrawals at 5% after requests equating to 10% of shares.
- Cliffwater's $31.3 billion fund experienced 17% redemption requests and capped outflows at 5%.
- There were $7.1 billion of redemptions across eight major private vehicles in the first quarter.
- U.S.-focused direct lending issuance fell 40% to $44.76 billion in the second quarter of 2026.