00:00Allison, I mean, it's hitting all the giants this morning, but 41 percent redemption requests.
00:05I mean, that is a punchy number. I don't think we've seen anything close to that from some of these
00:08other BDCs.
00:09No, it is by far and away the largest number we've seen. And recall that it's a continuation of the
00:15trend.
00:15We saw this last quarter with, well, you know, they did the asset sales of $1.4 billion of assets
00:21to try and meet redemption requests last time.
00:24And now this time around this quarter, they're saying we're stopping at 5 percent. You got to get in line.
00:30Yeah. And that makes sense. Right. Because Blue Owl and others had exceeded that level previously.
00:35And that just I mean, I don't know if moral hazard is the right term.
00:39Well, I mean, you're you're supposed to be saying, look, these things are illiquid.
00:43And if you let everybody take out all of their requests. Yeah.
00:46Isn't it creating like a false illusion of liquidity?
00:48It's I'm hearing from sources that there's actually a lot of anxiety and sort of debate within the alternative asset
00:54management industry right now about whether or not you enforce that 5 percent limit and essentially train the customer.
01:00Hey, this is what you signed up for. You signed up for up to 5 percent of shares per quarter.
01:05Or do you do what, you know, Blackstone has done, what Blue Owl did previously, where you stretch a little
01:10bit beyond the redemption limit to try and shore up confidence?
01:13Allison, what are the fears? What are the knock-on effects of, you know, 41 percent of your money running
01:20for the gate, whether or not, you know, you pay out?
01:23Well, one thing we're watching really closely is whether or not these funds are continuing to take in new money.
01:29So, for example, yesterday we saw KKR extend or hit its limit of its redemptions, but it also had gross
01:36inflows.
01:37So, yes, more money was leaving, but still a healthy amount of money was coming in.
01:41Now, a lot of these funds are taking a lot of steps and a lot of measures to sort of
01:46reinforce confidence, saying, hey, we've got a lot of liquidity.
01:49We've got cash on hand to meet redemptions. We also have strong performance in the portfolio.
01:54You know, this is market jitters. This is not reflecting anything related to performance.
01:59Please be patient. We will get you out, but maybe not as fast as you would like.
02:04I do wonder, though, because for a lot of the large, you know, publicly traded managers that you cover, their
02:10next leg of growth had been pinned on retail.
02:12Like, this was the big thesis of the next frontier because institutions are tapped out.
02:17What does it mean if maybe that slows down or isn't the next frontier?
02:21So, and it's so awkward, too, because we had the 401k executive order, you know, guidance come out this week.
02:28There's, like, a lot of stuff happening, and you're exactly right. Like, this is the next frontier of growth for
02:33these firms.
02:34This, I think, kind of like what we saw with B-Read a couple of years ago when more investors
02:40tried to get out of that fund as well.
02:42You know, Blackstone really said this is like a teaching moment. We're confident in this vehicle.
02:47You know, there's going to be some pain to work through, but we will get to the other side.
02:50And I think we also saw Apollo's Jim Zelter say the same thing this morning on television.
02:54You know, he said, this is kind of a moment of a bit of jitters, but we, you know, we
02:59need to kind of teach.
03:00We need to push through it. We need to kind of let people know this is how it works, and
03:03this is what you signed up for.
03:05He seemed to be wearing rose-colored glasses.
03:07I mean, I recommend viewers go back and watch that.
03:11It was a fantastic interview with John, Lisa, and Anne-Marie, but he was incredibly optimistic, seemed to think like,
03:18you know, the war in Iran, for example.
03:20This is just a blip.
03:21Yeah, I mean, on the other hand, you know, what I would also say, what else are these firms supposed
03:26to do, right?
03:27Like, you know, if you want to ensure confidence in your product, you want to ensure confidence in the market.
03:33But clearly there is some, like you were reporting on this morning, I mean, not credit, but KKR's private equity
03:36fund with a really big haul.
03:38It's so interesting, yeah.
03:39So I think what we're going to see in private credit and in private equity is haves and have-nots,
03:45right?
03:45The folks who can kind of ride the turbulence, you know, KKR has ridden through a couple tough years in
03:50private equity in the industry to bring in a massive amount of cash for their next fund.
03:55So they're going to be able to come out the other side of this, likely winners.
03:58We're going to probably see the same dynamic in private credit.
04:00Some people are going to be able to get through this redemption spike, you know, with strength and on the
04:04right foot, and others may not.
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