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After spending years on the waiting list for access to the private credit market, retail investors now keep running for the exits. 

Apollo Global Management is capping withdrawals from its Apollo Debt Solutions private credit fund at 5% after investors asked to yank 16.8% of their shares, according to a recent shareholder letter filed with the Securities and Exchange Commission. That's up from around 11% that investors asked to withdraw in the previous quarter. The firm estimates that gross outflows from Apollo Debt Solutions, which has around $25 billion in assets, will be roughly $700 million for the quarter, compared with just $300 million of inflows. 

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It's not Apollo's first redemption-capping rodeo. Last quarter, it also curbed redemptions at 5%. The spike in redemptions for Apollo is just the latest sign that investors are stressed out about the quality of semi-liquid private debt products, which promise everyday investors access to a slice of the market long reserved for pensions and other institutional investors. A main concern is that private credit markets are lending too much to software companies, which are ripe for AI disruption. 

Apollo is far from the only firm trying to stop investors from walking out: 

Earlier this month, Cliffwater limited redemptions from its private credit fund to 5% of outstanding shares after investors requested to withdraw 17%. Switzerland's Partners Group did the same at its flagship private equity fund as redemption requests hit 9.8%. 

BlackRock also set a 5% redemption cap this month after investors attempted to pull 13% from its HPS Corporate Lending Fund. 

No SVB Here: The Apollo Debt Solutions fund has still returned 8.13% since its launch in 2022. At a conference earlier this month, John Zito, co-president of Apollo Asset Management, said that retail-focused private credit market funds were performing as designed, according to the Financial Times. "The nice thing is, is no matter how much you've attacked the private debt business, there's been no run. There's been no SVB," he said, referring to the 2023 collapse of Silicon Valley Bank. "There's been no financial institution failing. The structure is right."

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