Monroe Capital has joined other private credit fund managers in capping its redemptions at 5%, as investors sought to redeem approximately 10% of shares.
The firm's Monroe Capital Income Plus Corp., a non-traded business development company, allowed half of the requested redemptions, according to a filing seen by Bloomberg.
The fund has a five-year track record and is specifically designed for registered investment advisors and high-net-worth investors. The focus is on "sponsored and non-sponsored borrowers with EBITDA between $3 million and $35 million and located in the U.S. and Canada," the firm's website states.
In a Bloomberg TV interview in April, Monroe CEO Ted Koenig said, "We've generated great returns for institutional investors, but that's a buy-and-hold strategy; it's not a liquid strategy. When individual investors want to get out, they're like fish — they swim in schools. They all come in at the same time, they all want to go out at the same time."
Last quarter, the fund allowed all its investors to redeem their investments despite the amount being over the 5% threshold, Bloomberg noted.
Other firms have recently capped redemptions on their private credit funds amidst turmoil in the $1.8 trillion private credit sector.
Blackstone Inc (NYSE:BX) restricted quarterly withdrawals in its $79 billion Blackstone Private Credit Fund after investors asked to withdraw approximately 10% of fund shares for the quarter, up from 7.9% in the prior period. The fund applied a 5% cap, framing the move as intentional rather than an emergency response.
Meanwhile, the flagship private credit fund of Cliffwater LLC capped redemptions at 5% in the second quarter after investors sought to redeem approximately 17% of the fund's shares.
Cliffwater told shareholders of Cliffwater’s Corporate Lending Fund (CCLFX) in a letter that they would receive one-third of the money they requested back, Bloomberg reported.
Partners Group is restricting investor withdrawals from its $8.6 billion Global Value SICAV fund after redemption requests exceeded 5% of the net asset value, a move that rattled sentiment across private markets.
The firm pointed to instability across open-ended vehicles since early last year, beginning in private credit and later affecting private equity, Reuters reported.
BlackRock Inc (NYSE:BLX), Ares Management Corp (NYSE:ARES), Morgan Stanley (NYSE:MS) and Barings (NYSE:BBDC) have also limited redemptions from private credit funds as of late.
Last month, JPMorgan Chase & Co. (NYSE:JPM) started restricting lending to software-related companies in its private credit funds.
Apollo Global Management (NYSE:APO) president Jim Zelter told attendees at Bernstein’s Strategic Decisions Conference in New York last month that he believes firms will continue to see investors looking to pull cash from private credit funds.
"I don't think it was a one-shot," he said of the redemption wave.
Zelter also warned that redemption pressure could tick higher if some investors try to time the limits. There “may be even a little bit of an increase if people want to game the system,” he said, adding, “We are not through the turbulence yet.”
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