Private Credit News Weekly Issue #105: Ares Raises a Record $36 Billion While Its Retail Fund Bleeds
Institutions pour in as Asian family offices head for the exits, Europe prices tighter than the US for the first time, and Apollo marks Medallia at 40 cents
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Ares just raised $36.4 billion in a single quarter, a firm record. The same quarter, its flagship retail fund got redemption requests for 14.4% of shares and gated at 5%.
Both things are true, and together they describe the market better than either alone. CEO Michael Arougheti says institutional demand is “probably accelerating right now because they’re seeing spreads widening and they’re seeing capital leave the market.” Translation: the smart money is buying the dip that retail is creating. About 75% of Ares’ $671 billion AUM is institutional. Fee-related earnings hit $491 million, up 20%. Dry powder sits at a record $170 billion.
The redemption pressure has a geography. More than half of Ares’ BDC requests came from family offices in Asia Pacific, where demand has been “cut in half.” Some 95% of investors didn’t redeem at all, and US advisers held firm. Ares is exploring “unique share classes” for international investors heading for the door. Cox Capital is circling with a tender at a 15% discount to NAV, which Ares urged shareholders to reject.
Blue Owl told a similar story with different numbers. Shares jumped 6% after executives stressed that direct lending is now just 35% of assets and the wealth products drawing “90% of the narrative” are 11% of fee-paying AUM. But credit fundraising fell to a three-year low of $1.8 billion, wealthy-individual inflows dropped to $1.7 billion from $4.4 billion, and net deployment was $600 million against $2.5 billion a year ago.
Apollo’s monthly disclosure delivered the ugliest data point: its Medallia loan, marked at 60 cents last quarter, now sits at 40. Apollo Debt Solutions raised $87 million in July, down 36% from June and its worst month in over two years. KBRA’s default monitor hit a record $30 billion across 92 borrowers over 12 months.
And in a first, European private credit now prices tighter than the US. Houlihan Lokey’s data shows European loans at 4 bps inside US paper, after historically running 22 bps wide. The $14 billion American redemption backlog has made US managers hoard liquidity while European lenders fight over scarce deals.
Key Market Themes
1. Ares Posts Record Fundraising as Its Retail Fund Gates
Ares raised more than $36.4 billion in the second quarter, a firm record, pushing AUM to $671 billion. Fee-related earnings climbed 20% to $491 million, beating estimates. Private credit funds accounted for $12.9 billion of the haul. Realized income jumped 31% to $521.5 million, and dry powder hit a record $170 billion.
The flows came even as the firm’s $10.8 billion Ares Strategic Income Fund gated at 5% after 14.4% of shares sought out. Arougheti’s explanation for the divergence: institutions see spreads widening and capital leaving, and want to take share. The quarter’s flows tilted toward alternative credit and real assets, a sign investors are rotating from traditional direct lending into hard collateral. Wealth-channel fundraising still grew 15% year over year to $3.9 billion, with wealth assets topping $76 billion.
The read
Ares just demonstrated that the retail exodus and an institutional land grab can happen simultaneously at the same firm. The $36 billion quarter kills the simple story that private credit is dying. What’s actually happening is a change of ownership: retail money that arrived late and priced nothing is leaving, and institutional money that understands cycles is arriving to buy the wider spreads retail’s exit created. The tilt toward alternative credit and real assets shows even the buyers rotating away from vanilla direct lending. The asset class survives. The product mix doesn’t.
2. The Redemption Wave Has an Address: Asia
More than half of Ares’ BDC redemption requests came from APAC family offices, with demand from the region cut in half. That echoes the Blue Owl OTIC story, where most of the UBS-channel money that fled was Asian. Ares said 95% of investors stayed put, US advisers remained supportive, and it’s exploring separate share classes for international investors in the redemption queue.
Cox Capital, meanwhile, launched a tender for ASIF shares at a 15% discount to NAV. Ares urged rejection. The playbook mirrors Saba’s failed Blue Owl tender earlier this year, which captured less than 1% of shares.
The read
The redemption wave was never a uniform retail panic. It’s concentrated in a specific channel: Asian wealth money that piled in through bank platforms during the boom and is now unwinding with the same herd behavior on the way out. That’s oddly reassuring for the industry. A geographic and channel-specific problem is containable in a way a broad loss of faith isn’t. The “unique share classes” idea is the tell, though. Managers are re-engineering fund structures around the flight risk of specific distribution channels, an admission that the original design never accounted for who the money actually was.
3. Blue Owl Rebrands Itself Mid-Storm
Blue Owl shares jumped 6% after executives spent the earnings call stressing what the firm isn’t. Direct lending is 35% of assets, down from nearly half two years ago. The wealth products in direct lending drawing most of the scrutiny are 11% of fee-paying AUM. Fee-related earnings rose 9% to $392.2 million, beating estimates. AUM hit $319 billion. The firm raised $16.5 billion in equity capital in the first half, with investors arriving from Australia, Europe, and the Middle East.
The credit numbers underneath were soft. Quarterly credit fundraising fell to $1.8 billion, a third of last year’s level and a three-year low. Wealthy-individual inflows dropped to $1.7 billion from $4.4 billion. Direct lending returned 1.7% net versus 2.2% a year ago, and net deployment was $600 million against $2.5 billion. CFO Alan Kirshenbaum called it an inflection: redemptions down quarter over quarter, inflows troughing in May. Some 90% of investors in the $34 billion Blue Owl Credit Income Corp didn’t request a dollar back.
The read
Lipschultz’s pitch amounts to: stop valuing us as a direct lender. The 35%-of-assets framing is accurate and also convenient, since the other 65% (data centers, real estate, GP stakes) is where the growth story lives. The market bought it for a day. The harder question is what the credit franchise is worth if fundraising has fallen two-thirds and deployment three-quarters. A fee machine needs new assets, and the credit engine that built Blue Owl is idling. The diversification is real. So is the reason it’s suddenly the headline.
4. Apollo Marks Medallia at 40 Cents as Fundraising Craters
Apollo’s monthly shareholder supplement showed its term loan to Medallia, the software company creditors seized in June, marked down to roughly 40 cents on the dollar from 60 cents the prior quarter. The same document showed Apollo Debt Solutions raised $87 million in July, down 36% from June and a fraction of the $346 million raised last July. It’s the worst capital-raising month in over two years for Apollo’s largest private BDC.
The fund gated this month after redemption requests hit 16.8%, up from 11.2%. Bloomberg Intelligence’s Michael Kaye noted the portfolio grew just 0.9% in the quarter and said the trend “points to persistent pressure on net investor flows,” though credit metrics remain relatively well-positioned and slower deployment has supported pricing on new deals.
The read
The Medallia mark is the number that travels. Blackstone and KKR cut the loan from 80 to 60 cents over three months. Now Apollo has it at 40. Every BDC holding stressed software paper just got a fresh comp, and it points down. The fundraising collapse compounds it: a fund raising $87 million against 16.8% redemption requests is shrinking fast, and shrinking funds have less capacity to hold troubled credits through workouts. Apollo’s monthly disclosure deserves credit for transparency. It also shows exactly why most managers prefer quarterly.
5. Europe Prices Through the US for the First Time
European direct-lending loans now price about 4 bps tighter than US equivalents, per Houlihan Lokey, after historically running 22 bps wide. The inversion reflects the $14 billion US redemption backlog, which has left American managers hoarding liquidity rather than chasing deals, while European lenders compete fiercely for scarce M&A. GBA Group, a German lab-services business, got €425 million at around 475 bps over Euribor from CVC, Goldman, and Apollo. A comparable US deal, Caris Life Sciences, priced at 500 over SOFR in April.
Recipharm’s €880 million term loan tightened to 350 bps from 375 during syndication, for a B2-rated dividend deal. Software has fallen out of favor on both continents. Allianz’s Damien Guichard, holding exposure around 5%, put it plainly: “Some lenders at the time were considering those types of assets as risk-free, but they’re not.”
Ares, meanwhile, is preparing to sell €3 billion of bundled stakes in a flagship European fund, one of the largest credit-secondaries deals ever. Tikehau closed its sixth European direct-lending vintage at €5.2 billion, up 60% from its predecessor.
The read
The US premium over Europe was structural for a decade: deeper market, more capital, more competition. It took one redemption cycle to invert it. American managers preserving liquidity for withdrawals can’t bid aggressively on new deals, so spreads drifted wide. European lenders with no BDC structure and no redemption mechanics kept competing, so spreads ground tight. The lesson is uncomfortable for the US model: the retail capital that supercharged American private credit is now the thing making it uncompetitive. Borrowers with a choice are noticing.
6. BlackRock’s HPS Bet, One Year In
A year after closing its $12 billion HPS acquisition, BlackRock’s private credit business stands at roughly $151 billion, with about $27 billion of net new money over 12 months. The Meta data center win in El Paso, alongside Global Infrastructure Partners, put the firm in direct competition with Apollo, Blackstone, and Blue Owl for the biggest financings. The $12.55 billion bond sale backing that project priced at 7.534%, junk-level yield for investment-grade paper, and rallied in early trading after tepid syndication demand of just 1.6x.
The integration has been rougher underneath. HPS executives spent much of the year cleaning up legacy BlackRock loans, including e-commerce aggregator exposure with losses topping $500 million. TCPC slashed asset values 19%, drew a Manhattan US Attorney valuation probe and SEC scrutiny, and its CEO Phil Tseng is leaving. Only about a dozen people remain from BlackRock’s old US private debt team after two rounds of cuts. HLEND gated for a second straight quarter after 13% redemption requests, returning 7.5% over the past year versus 10% annualized since inception.
The read
BlackRock paid 30 times earnings for HPS and immediately inherited the worst year in private credit’s history. The scoreboard is genuinely mixed: the Meta deal proves the firm can now compete at the top of the market, while the TCPC mess proves the legacy book was worse than advertised. The strategic logic still holds, with $700 billion of insurance assets that could rotate 10% into private credit and a 401(k) push that dwarfs the retail money currently fleeing. The question was never whether year one would be ugly. It’s whether the institutional pipes get built before the retail channel finishes draining.
Deals of Note
Ancestry.com - Blackstone-backed firm sold $2B in loans and bonds at sweetened terms; loan at 425 bps and 98.5, bond at 9%, with tighter covenants after investor pushback
Meta El Paso - BlackRock-tied Sopaipilla vehicle sold $12.55B of IG bonds at 7.534% yield; rallied in secondary despite 1.6x syndication coverage
GBA Group - CVC, Goldman, and Apollo provided €425M at ~475 bps over Euribor for the Bridgepoint-owned lab-services firm
Ares European secondaries - Preparing to sell €3B of bundled stakes in a flagship European direct-lending fund, among the largest credit-secondaries deals ever
Integra Testing - Blackstone led ~$400M supporting Harvest Partners’ buyout
Spreo Capital - Fortress acquiring up to $750M of loans via forward flow agreement
Tikehau - Closed sixth European direct-lending vintage at €5.2B, up 60% from predecessor
Canoe Intelligence - Bloomberg LP agreed to acquire the private markets data platform, which processes 1.5M documents monthly across 44,000+ funds
The Reality Check
Ares raising a record $36 billion while gating its retail fund is the whole cycle in one earnings call. The money isn’t leaving private credit. It’s changing hands, from Asian family offices who bought at the top to institutions buying the spreads their exit created. Arougheti practically said it out loud: institutions are accelerating because capital is leaving. One investor’s redemption is another’s entry point.
The Asia concentration reframes the panic. This was never a broad retail revolt. It’s a specific channel, bank-distributed wealth money from APAC, unwinding with the same herd instinct it arrived with. That’s containable. It’s also a warning about the next distribution deal any manager signs: know whose money it actually is, because concentrated channels redeem in concentrated waves.
Apollo’s 40-cent Medallia mark is the quarter’s most consequential number. The loan went 80, 60, 40 in nine months across three different holders’ books. Every stressed software credit in every BDC now has a downward-pointing comp, and the SDNY is already asking why the same loan carries different marks. The managers still holding similar paper at 70 or 80 have a decision approaching.
Europe pricing through the US for the first time ever is the structural story hiding under the weekly noise. The retail capital that made American private credit the deepest market in the world is now the source of its competitive disadvantage. Managers hoarding liquidity for redemptions can’t lend aggressively, and borrowers with options are going where the money isn’t trapped. The US model built on semi-liquid retail vehicles just discovered what that liquidity costs when it runs.