Private credit roundup: Private equity catches the cold

LONDON, June 5 (Reuters) - Stresses in private credit are spilling into adjacent private equity markets. Swiss asset manager Partners Group capped redemptions this week, signalling the volatility in private credit, which typically issues the loans that finance private equity investments, is spreading.

Partners Group, which oversees about $185 billion, flagged more withdrawal requests from its funds and reported being affected by industry-wide volatility from private credit. That stress had so far been isolated in the equity segment to situations like with software firm Medallia which private equity firm Thoma Bravo is handing over to its lenders.

A slump in Partners Group shares fed through to peers in Europe and the United States, reflecting broader skepticism among investors about the asset class.

Like other private investment vehicles, Partners Group faces challenges to its rapid growth, as increasing investor doubts regarding valuations, transparency, and liquidity in private markets impact its trajectory.

Reuters reported on concerns about how Partners Group was performing had been growing for months, particularly over its evergreen funds, a novum in the industry designed to allow clients to access their money more easily.

Private credit funds are also experiencing sustained redemption pressures in the second quarter of 2026.

Blackstone's private credit fund capped withdrawals at 5% after facing requests for 10% of shares. Similarly, Cliffwater's $31.3 billion fund saw 17% redemption requests, also capped at 5%.

This follows $7.1 billion in redemptions across eight major vehicles in the first quarter, highlighting a continued investor desire to pull capital from private markets.

The rapid expansion of private credit is also over for now, with U.S.-focused direct lending issuance plummeting 40% to $44.76 billion in the second quarter of 2026. Industry data reveals subdued fundraising and elevated redemption requests from investors, signalling a cautious phase for the industry.

This trend could curb earnings for private credit managers by limiting asset growth and transaction fees, especially as funds preserve cash amid withdrawal pressures.

(Compiled by Vidya RanganathanEditing by Nick Zieminski)