Apollo Global Management (NYSE: APO) has now watched investors rush for the exits of its private credit fund for three straight quarters. That's a pattern, not a blip.

The $26 billion Apollo Debt Solutions BDC is capping redemptions at 5% of outstanding shares after investors sought to redeem 14.7% of shares. That's actually an improvement from the prior period, when investors asked for 16.8%, according to Bloomberg, which cited an investor letter.

Here's the math on the money moving around. Apollo Debt Solutions pulled in $200 million of gross inflows during the third quarter, dividends included. After $700 million in share repurchases, the fund expects net outflows of roughly $500 million, equivalent to 3% of NAV. Since its 2022 debut, the fund has delivered an annualized return of 8.2%, according to Apollo.

Part of the problem is a backlog. The firm said a large share of redemption requests came from investors who had previously tried to exit but couldn't get their requests fully satisfied. After the latest repurchases, investors who submitted redemption requests this year are expected to receive roughly 75% of the capital they sought to withdraw, the letter stated.

Private Credit Faces Pressure

Apollo isn't alone in this. Private credit funds have been capping redemptions at 5% in recent months amid rising concerns about asset quality and valuations, particularly in software lending.

The flagship private credit fund of Cliffwater LLC capped redemptions at 5% in the third quarter after investors asked to redeem about 16% of shares.

Morgan Stanley (NYSE: MS) continued to face elevated redemption demand at its North Haven Private Income Fund, with investors seeking to withdraw 11.4% of shares in the latest quarterly repurchase window, more than double the 5% the fund plans to buy back.

Blackstone (NYSE: BX) President and COO Jon Gray says investor confidence in private credit will recover and inflows will return, despite redemption pressure at the firm's $77 billion private credit fund and broader concerns about valuations and underwriting.

"Over time, investor confidence will be rebuilt, and the inflows will return. There's a lot of noise, a lot of critics; the town criers are proclaiming a global crisis — and then nothing happens," Gray said earlier this month.

Blackstone's private credit vehicle also saw elevated redemption requests this month, capping the withdrawal limit at 5% after investors sought to tender roughly 10% of shares during the third quarter for the $77.2 billion Blackstone Private Credit Fund (BCRED).

BCRED received $4.3 billion of repurchase requests in the third quarter, and some of that demand reflected investors who had already tried to redeem in the second quarter. In the prior quarter, the fund satisfied about half of the $4.5 billion in requests, leaving $2.3 billion outstanding, of which some was resubmitted in the latest tender.