Ares caps withdrawals again at its flagship $23bn private credit fund as investor redemption pressure intensifies across the asset class

Ares Management has again restricted investor withdrawals from its flagship $23bn private credit fund — the second time it has imposed such limits — as redemption requests from investors continue to outpace the fund's ability to return capital without forced asset sales. The development mirrors a pattern seen last week at Morgan Stanley, which similarly capped redemptions from its private credit fund after 11.6% of investors requested exits. Together, the two incidents point to a structural liquidity mismatch at the heart of the private credit boom: funds marketed to retail and institutional investors as offering periodic redemption rights are holding long-dated, illiquid assets — predominantly direct loans (loans made directly to companies without going through a bank) to private equity-backed businesses — that cannot be rapidly liquidated to meet exit requests. Separate data published this week by PitchBook LCD reinforces the stress: private credit LBO (leveraged buyout) financing volume is down 21% year-on-year in Q2 2026, with US private equity deal value totalling just $117bn in Q2 through 23 June — less than half of Q1 levels and the lowest quarterly reading since Covid-19 in early 2020. Across all deals, private credit originated an estimated $29.2bn in loans in Q2 through 22 June, down from $74.1bn in Q1 and from $66.4bn in the comparable 2025 quarter. The steep fall in activity is concentrated among PE-backed borrowers, which are reluctant to transact given limited exit opportunities. No specific legal advisers to the Ares fund are named in the available sources.