Non-listed business development companies (BDCs) investing in private credit recorded their first-ever quarter in which investor redemptions exceeded new capital raised, according to a report by Bloomberg citing data from Robert A Stanger.
The figures show that non-traded private credit funds returned approximately $7bn to investors in the first quarter while raising around $5bn, resulting in net outflows across the segment.
Stanger chief executive Kevin Gannon said the shift reflects a broader slowdown in fundraising alongside rising redemption pressure, noting that more capital exited non-listed BDC structures than entered them for the first time on record.
Total redemption requests exceeded $15bn during the quarter, prompting many funds to activate liquidity management tools, including caps limiting withdrawals to around 5% of fund assets.
The vehicles, which market themselves as offering partial liquidity in otherwise illiquid private credit investments, have come under increased strain as investors reassess risk exposure in the sector. Concerns cited by market participants include underwriting standards, loan quality, and exposure to companies in sectors perceived as vulnerable to disruption from artificial intelligence.
Inflows from dividend reinvestment programs were excluded from the reported fundraising figures, which may have partially offset outflows but were not counted in the headline net flow calculation.
Performance also weakened during the period, with the Stanger NL BDC Total Return Index posting its first negative return since the second quarter of 2022, slipping 0.03%.
