NEW YORK — Blue Owl Capital, a New York-headquartered private credit investment firm, imposed a cap on withdrawals equal to 5% of the value of each fund per quarter after investors sought to redeem $5.4 billion from two of its key funds between January and March. The restriction followed a period in which investors asked to take back 21.9% of the cash stored in the firm's $20 billion Credit Income Corp fund and requested 40.7% of the assets held in a separate $3 billion tech lending fund.

By capping quarterly withdrawals at 5% of each fund's value, Blue Owl limited the amount of capital that could leave the funds in any single quarter, meaning investors who submitted large redemption requests would receive only a fraction of the amount they sought.

The firm said the surge in withdrawal requests did not reflect any problems with the loans it issued to clients. Blue Owl attributed the wave of redemptions to a period of heightened negative sentiment toward the private credit asset class, which it said had intensified as rival firms published details of their own redemption requests.

"While we believe market perception has driven elevated tender activity, underlying credit fundamentals across our portfolio have remained resilient," the firm said. It described the withdrawal caps as consistent with the existing terms governing its fund structures. "This decision was made in accordance with the fund structure, reflecting our commitment to balancing the interests of both tendering and remaining shareholders," the firm added.

The restrictions coincide with a broader period of scrutiny facing the private credit industry. Jamie Dimon, chief executive of JP Morgan, warned that more "cockroaches" were likely to emerge in the private credit sector. The International Monetary Fund separately raised concerns about potential ripple effects from private credit failures that could hit high street banks.

Andrew Bailey, governor of the Bank of England, cautioned against dismissing recent private credit failures as isolated incidents because a lack of transparency made it hard to determine overall risks across the sector. Bailey said that without transparency, confidence in the wider system could crumble.

Bailey added that although the private credit industry was concentrated in the U.S., there could be spillovers into U.K. borders due to the interconnected nature of the global financial system.