LONDON, June 5 (Reuters) - Stresses in private credit

are spilling into adjacent private equity markets. Swiss asset

manager Partners Group capped redemptions this week, signalling

the volatility in private credit, which typically issues the

loans that finance private equity investments, is spreading.

Partners Group, which oversees about $185 billion,

flagged more withdrawal requests from its funds and reported

being affected by industry-wide volatility from private credit.

That stress had so far been isolated in the equity segment to

situations like with software firm Medallia which private equity

firm Thoma Bravo is handing over to its lenders.

A slump in Partners Group shares fed through to peers in

Europe and the United States, reflecting broader skepticism

among investors about the asset class.

Like other private investment vehicles, Partners Group faces

challenges to its rapid growth, as increasing investor doubts

regarding valuations, transparency, and liquidity in private

markets impact its trajectory.

Reuters reported on concerns about how Partners Group was

performing had been growing for months, particularly over its

evergreen funds, a novum in the industry designed to allow

clients to access their money more easily.

Private credit funds are also experiencing sustained

redemption pressures in the second quarter of 2026.

Blackstone's private credit fund capped withdrawals

at 5% after facing requests for 10% of shares. Similarly,

Cliffwater's $31.3 billion fund saw 17% redemption requests,

also capped at 5%.

This follows $7.1 billion in redemptions across eight major

vehicles in the first quarter, highlighting a continued investor

desire to pull capital from private markets.

The rapid expansion of private credit is also over for now,

with U.S.-focused direct lending issuance plummeting 40% to

$44.76 billion in the second quarter of 2026. Industry data

reveals subdued fundraising and elevated redemption requests

from investors, signalling a cautious phase for the industry.

This trend could curb earnings for private credit managers

by limiting asset growth and transaction fees, especially as

funds preserve cash amid withdrawal pressures.

(Compiled by Vidya Ranganathan

Editing by Nick Zieminski)