partners group The Swiss private markets giant said on Thursday it was prepared to restrict investor withdrawals in more of its funds, after it imposed caps on redemptions at one of its European vehicles following a surge in withdrawal requests.
A Zurich-listed fund manager has warned that the surge in customer withdrawals that roiled private credit markets this year now appears to be spilling over into the private equity space.
On Wednesday, Partners Group announced that it would suspend withdrawals from its Global Value SICAV vehicle at 5% after redemption requests reached 9.8%.
Another fund in the fund, a Delaware-based U.S. private equity vehicle, also warned that it expected to face redemption claims of about 6% of its net asset value in the second quarter. The other three evergreen funds, which have total assets of about $9.7 billion, will likely see second-quarter redemptions of 3.5% to 5%, Partners Group said.
Partners Group AG.
Partners Group acknowledged in a statement that volatility has increased across open-end so-called “evergreen” funds, adding that it would impose a 5% liquidity limit on such vehicles if withdrawal requests exceed that threshold.
A rush of investor exits has reignited concerns about pressure in the global private markets industry.
“Liquidity features are designed to protect long-term investors and ensure that returns continue to be driven by the quality of the underlying personal assets, rather than short-term flow dynamics,” CEO David Leighton said in a statement.
He said Partners Group’s portfolio companies have “significant upside potential”, adding that since inception, the firm’s flagship funds have delivered returns for clients of more than five times their initial investment.
Partners Group said about 80% of its $185 billion in assets under management come from long-term institutional investors and 20% from retail investors.
Shares in Zurich-listed Partners Group plunged more than 16% on Wednesday, while the main stock in the U.S. private market KKR, black stone and AresWednesday also ended lower.
Partners Group was trading 3.6% higher in Thursday morning trading.
Gresham House CEO Tony Dalwood told CNBC’s Europe Early Edition that Partners Group’s moves highlight the importance of matching investors with funds whose underlying assets have the right liquidity and duration characteristics.
Individual and asset clients typically invest for shorter periods of time than institutional investors such as pension funds and insurance companies.
“Private markets should primarily be for people with these long-term ambitions and investment horizons, and should be matched accordingly,” Mr Dalwood said.
He said the so-called “democratization” of private markets has led to more private asset management companies entering the personal wealth management space, and that there is a need for stronger investor education about liquidity restrictions during market stress.
Dalwood added that about 3% of his personal wealth is in evergreen vehicles, but this is likely to increase over the next few years.
