Partners Group, the Swiss private markets investment manager, is confronting a fresh wave of fund withdrawals as stress continues to spread across the private equity landscape. The firm, which manages over $140bn in assets, has seen a rise in redemption requests from institutional investors, including pension funds and sovereign wealth funds, seeking to reduce their exposure to illiquid assets.
The latest outflows follow a trend that began in late 2023, when several large private equity groups faced mounting pressure from limited partners demanding capital returns. Higher interest rates have eroded the relative appeal of private market valuations, while a sluggish exit environment has left many investors locked into funds longer than anticipated. Analysts at RBC Capital Markets noted that the strain is particularly acute for firms with large exposure to leveraged buyouts and real estate.
For UK investors, the implications are significant. Many British pension schemes, including those in the Local Government Pension Scheme (LGPS) and corporate defined benefit plans, have allocated substantial portions of their portfolios to private equity and infrastructure funds managed by groups like Partners Group. As redemption queues lengthen, these schemes may face difficulties in rebalancing portfolios or meeting cash flow needs. "The liquidity mismatch between daily-priced liabilities and quarterly- or annual-priced assets is a growing concern for trustees," said one London-based pension consultant.
The FTSE 100 edged 0.3% lower to 7,624 points in afternoon trading, with financial and asset management stocks underperforming. Shares in Schroders and Abrdn, both with private market operations, fell 1.2% and 0.9% respectively. The broader market sentiment was subdued as investors weighed the risk of contagion from private markets into listed equities. The FTSE 250 dropped 0.4% to 19,210 points.
Industry observers point out that the current cycle differs from the 2008 financial crisis, as the stress is concentrated in valuation uncertainty rather than leverage. Nonetheless, the Bank of England has been monitoring private market exposures among UK insurers and pension funds. A senior analyst at a UK asset manager commented: "The risk is not systemic in the traditional sense, but it creates a slow-burn drag on performance and liquidity that will take years to unwind."
Partners Group has not publicly commented on the latest redemption figures. However, the firm has previously stated it maintains sufficient liquidity buffers to meet withdrawal requests in an orderly manner. The coming months will be critical as more investors test the exit gates.