Key insights
- Goldman Sachs' private credit fund saw redemption requests below the 5% cap, contrasting with a surge in redemptions across the industry due to concerns about AI's impact on software companies' ability to repay loans. This highlights potential vulnerabilities in the private credit sector, particularly concerning lending standards and valuations, which could negatively impact equity markets if credit conditions tighten.
April 6 (Reuters) - Goldman Sachs' private credit fund said its investors sought to repurchase just under 5% of shares in the first quarter, which were fulfilled and below its quarterly repurchase cap.
"We believe these results highlight the strong position of GS Credit relative to the broader non-traded BDC (Business Development Company) industry," it said in a regulatory filing on Monday.
Fears that artificial intelligence could erode the earnings power of software companies and weaken their ability to repay loans are rippling through the private credit industry, a key lender to the technology sector, prompting investors to reassess their exposure, redemption risks and fundraising prospects.
Several asset managers have capped redemptions at the standard 5% quarterly limit after a recent surge in withdrawal requests, driven by negative headlines that have put the roughly $2 trillion private credit industry under intense scrutiny over lending standards, valuations and transparency.
"We are the only non-traded BDC in the peer group whose repurchase requests came in below the standard 5% quarterly cap," Goldman said.
The Wall Street firm added that the fund generated roughly $823 million of proceeds from repayments and sales of portfolio investments, up from $669 million in the previous quarter.
(Reporting by Manya Saini in Bengaluru; Editing by Shinjini Ganguli)