While semiliquid private credit funds continue to dominate headlines after experiencing heightened redemption requests over the past several quarters, industry insiders predict the trend will eventually spread to the private equity sector. However, they don’t view it as a bad thing, noting instead that individual investors will come to better understand how semiliquid funds work and that the “limited liquidity” warning that comes with these vehicles means just that.
The first signs that private equity semiliquid funds might be facing a redemption challenge of their own came in early June, when Switzerland-based asset manager Partners Group reported it had to limit redemptions from its Global Value Sicav fund (a semiliquid fund for European investors) after requests reached roughly 9.8% of the fund’s value in the second quarter of the year. The fund comes with a standard 5% quarterly redemption cap typical of semiliquid vehicles. Within a few days of the initial announcement, Partners warned that it would enforce a 5% cap on another Delaware-domiciled private equity semiliquid fund as redemption requests began to exceed the limit.
On June 12, Partners Group published a statement that denied it was considering any further liquidity restrictions or changes to the liquidity mechanisms of its evergreen funds. It sought to reassure investors that the two evergreen funds impacted by outsized redemption requests delivered good performance in 2025, with approximately 15% in realizations, and continued to operate normally, investing in new assets and accepting new subscriptions.
To analysts tracking semiliquid funds, rising redemption requests for Partners’ private equity funds don’t come as a surprise. Like non-traded REITs and private credit BDCs before them, private equity funds designed for private wealth investors will eventually face a cyclical uptick in redemptions, according to Jack Shannon, principal, equities strategies, manager research, at Morningstar. That will simply become an expected part of investing in such vehicles, much like stock market dips for public equities investors.
“I think eventually it will get to a cyclical level, like we see in public markets over time. And I also think there will be better understanding of ‘the promised liquidity is the promised liquidity,’” Shannon said. “Hopefully, the private credit experience taught these wealth managers that, ultimately, this is an illiquid asset in their portfolios.”
While, in Shannon’s view, many of the U.S.-based private equity semiliquid vehicles are too early in their life cycles to face a major redemption challenge, a likely catalyst for such an event would be concerns about their exposure to software companies—the same culprit that precipitated the uptick in redemptions with private credit funds. In fact, both Shannon and Kimberly Flynn, president at XA Investments, which tracks the performance of interval and tender offer funds, expressed surprise that fears AI would drive software firms out of business have been impacting semiliquid private credit vehicles rather than private equity funds, since PE stakeholders would be the first to take losses in event of distress and semiliquid private equity funds hold a greater percentage of assets in the software and technology sectors than their private credit counterparts.
“For the last period we reported on, the private equity category was healthy, not seeing much demand for liquidity,” said Flynn. “But we were kind of scratching our heads because if you are really worried about AI impact on software names, you would expect it to hit private equity.”
Going forward, however, Flynn expects to see more redemption requests in the private equity space, now that Partners Group’s announcements may have made investors nervous. So does Neil Shah, executive director and market strategist at Edison Group, a global investment research and consulting firm. Even though the initial Partners Group fund impacted by outsized redemption requests is based in Europe, “investor sentiment doesn’t respect borders,” especially for private wealth investors already nervous about accessing liquidity, Shah wrote in an email. Then, if asset managers cap redemptions at their legal minimums—as Flynn expects they will—more investors and advisors will try to exit the funds with each subsequent quarter that redemption requests are not fully paid up. Shah described it as a “self-reinforcing dynamic that’s very difficult to stop once it takes hold.”
An additional pressure is that the liquidity profiles of private equity funds differ from those of private credit funds. Unlike private credit funds, which receive regular cash flows from interest and loan repayments on the loans on their books, which they can then use to pay down redemptions, private equity funds’ recurring income is more constrained.
They rely largely on refinancing and selling off the companies they hold to raise capital. In the current slow M&A environment, that might be challenging. (In addition, semiliquid private equity funds typically hold some cash on hand for liquidity purposes, but maintaining larger cash allocations to meet redemptions reduces overall returns on a fund’s total AUM.) Meanwhile, taking on more debt or selling their most attractive assets to satisfy additional redemption requests would negatively affect returns and the fund’s risk profile for its remaining investors, Shah noted. That’s why Flynn doesn’t believe private equity fund managers are going “to flex up” and exceed their contractually obligated redemption limits in order to reassure investors trying to exit.
Flynn also noted that the majority of semiliquid private equity vehicles are structured as tender offer funds rather than interval funds and are not required to provide regular liquidity. In practice, however, they have been meeting quarterly redemption requests, matching what interval funds do.
“That’s why we’ve also heard a lot of conversations around the industry that for private equity, the tender offer fund is a better structure because they could stop providing liquidity to protect shareholders,” Flynn said. “Now, people won’t like it if they are trying to exit, but it is a protective move.”
In Shannon’s view, over the next several years, semiliquid private equity funds are going to implement lower liquidity standards than private credit funds, a trend that might have already started. He pointed to Stepstone Private Venture and Growth Fund, which has capped redemptions at 2.5% of shares per quarter, and to Blackstone Private Equity Strategies, which instituted a quarterly cap of 3.0% of the fund’s NAV.
“I think it’s ultimately a good thing because there is less liquidity in equity than credit,” Shannon said. “We’ll see when the redemption cycle comes, if investors understand how little 3% a quarter is. I think it’s good from a matching liquidity profiles perspective.”