Private credit investors reject Cox Capital’s 26% discount offer

Investors largely rejected Cox Capital Partners’ offer to provide immediate liquidity by buying private-credit fund shares at an average 26% discount.

Cox received less than $5 million in orders by the deadline, despite offering to purchase as much as $90 million of shares in five non-traded business development companies managed by HPS Investment Partners, Apollo Global Management, Ares Management and Blue Owl Capital.

The bids offered varying discounts and some received no offers, according to people familiar with the matter. Cox Chief Executive Officer John Cox said the firm would continue making offers and could adjust terms based on market conditions.

The proposal came as private-credit funds face a redemption backlog of nearly $15 billion. Non-traded BDCs typically cap redemptions at about 5% of net asset value, leaving some investors unable to withdraw their money.

Concerns have grown around asset quality and software exposure after the US private-credit default rate reached a record high in April, according to Fitch Ratings. Non-traded private-credit funds returned more money than they raised in the first quarter.

Cox is extending the strategy to interval funds managed by Cliffwater and Variant Investments. Investors requested withdrawals equal to about 50% of Variant’s Alternative Income fund shares and 17% of Cliffwater’s flagship interval fund in the latest quarter, according to a person familiar with the matter.

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