Private credit gadflies sense public opportunities

Investors frustrated with redemption processes could therefore be tempted to accept discounts, harvest tax losses and reinvest the proceeds into even more deeply discounted public BDCs. The question is how hard a bargain to strike. Cox is offering 70 cents on the dollar to Apollo fund holders, 75 cents to those in HPS, and 85 cents for Ares shares. It has also contacted Blue Owl about potential tenders for its Credit Income Corporation and Technology Finance Corporation funds.

Pricing discrepancies could be determinant. Apollo’s ADS does not have a public twin, while the listed Ares sibling is trading at a razor-thin discount of 94 cents. Cox is counting on the allure of an early exit, but is implicitly charging a hefty toll for the service. It largely failed, alongside Boaz Weinstein's Saba Capital earlier this year, to persuade investors in Blue Owl and Starwood Capital funds of the idea at the height of private credit dismay in March. The gap between panic and opportunity may yet be too far apart.