ARES MANAGEMENT CAPS REDEMPTIONS AT PRIVATE CREDIT FUND

Ares Management restricted redemption requests from its Ares Strategic Income fund during the second financial quarter, honouring only one-third of withdrawal applications worth $1.5bn. The fund, which holds approximately $11bn in assets, received redemption requests totalling 14.4 per cent of the vehicle, an increase from 11.6 per cent in the prior quarter. Ares implemented a five per cent redemption cap built into the fund structure. The firm attributed most outflows to non-US institutions and family offices seeking to exit the investment.

The Ares Strategic Income fund manages an investment portfolio worth roughly $22bn and returned 8.2 per cent over the past year. Ares stated in a letter to shareholders that it made the redemption decision aligned with the interests of all stakeholders, including the significant majority of shareholders remaining invested and lenders and bondholders. The move follows similar restrictions implemented by Morgan Stanley, which gated its North Haven private income fund as redemption requests reached 11.6 per cent. Apollo Global reported withdrawal requests from one of its funds swelled to nearly 17 per cent.

The redemption surge reflects broader concerns about private credit funds as the asset class shifts from institutional investor dominance to attracting wealthy retail investors. Semi-liquid funds, which promise quarterly withdrawal opportunities without formal end dates, have expanded retail access to the sector. Ares shares declined 30.1 per cent since January, trading at $116.1. The withdrawal requests surpassing promised liquidity thresholds indicate mounting pressure on redemption limits across the private credit industry.