Turmoil in Private Credit Market as Investors Flock to Withdraw Funds
Investors are reportedly beginning to abandon the Cliffwater Corporate Lending Fund, valued at US$42 billion or approximately Rp713.03 trillion, amid rising concerns over the transparency and asset valuations in its portfolio. This private credit fund has even restricted fund withdrawals (redemptions) after requests to sell surged sharply from shareholders.
According to the Wall Street Journal, many investors believe the reported net asset value (NAV) is likely too high, prompting them to sell their holdings or attempt to exit the fund. These concerns are exacerbated by the complexity of the portfolio, which is difficult to understand, featuring thousands of assets unfamiliar to investors.
In its latest quarterly report, Cliffwater recorded over 3,600 holdings, including direct loans to mid-sized companies and investments in other private credit funds. Additionally, there are around 1,700 undrawn loan commitments to nearly 1,000 borrowers totalling US$6.9 billion.
The majority of names in the portfolio are not widely known, such as Accordion Partners, ALKU Intermediate Holdings, and ZB Holdco. This further complicates investors’ ability to assess the risks and quality of the fund’s assets.
Cliffwater is the largest SEC-registered interval private credit fund, with total assets of US$42 billion and net assets of US$31.6 billion at year-end. One of its former overseers was Paul Atkins, who resigned before taking office as Chairman of the Securities and Exchange Commission in April 2025.
One example that has triggered investor scepticism is Cliffwater’s investment in Ares Commercial Finance since 2021. The fund was previously said to be liquidated on 30 June 2025, but Cliffwater continued to report the holding and even an increase in its value after that date passed.
As of September 2025, Cliffwater recorded US$11 million in unrealised gains from the investment, with a fair value of US$64.9 million. However, the report still listed the passed liquidation date without additional explanation.
Three months later, the investment’s value rose to US$111.5 million with an acquisition cost of US$98.6 million, and paper gains of US$12.8 million. The lack of explanation for these changes further strengthens investor doubts about reporting transparency.
In response, Cliffwater stated that the listed liquidation date was an administrative error not updated after the change to an evergreen fund in the third quarter of 2025. Evergreen funds operate without a time limit, and the change has been approved by investors.
On the other hand, valuation transparency is also under scrutiny because around 71% or US$29.7 billion of assets are categorised as Level 3, meaning assets with significant valuation inputs that are not directly observable in the market. This condition makes asset valuation highly subjective and reliant on assumptions.
Another US$11.6 billion or 28% is placed in other private investment vehicles, where Cliffwater relies on the net asset values reported by those fund managers. This reliance requires investors to trust a layered valuation process that is difficult to verify.
Concerns over private credit valuations are also rising due to external factors such as surging oil prices, inflation risks, and the impact of artificial intelligence developments on highly indebted technology companies. This combination amplifies uncertainty about the quality of assets in the portfolio.
As an interval fund, investors cannot withdraw funds at any time and must wait for specific periods to request redemptions. Cliffwater typically limits share buybacks to 5% per quarter, but in the latest period, requests reached 14% and only 7% could be fulfilled.
For years, Cliffwater’s NAV has remained relatively stable around US$10 to US$10.52 per share, with minimal daily fluctuations. This stability was previously seen as an advantage, but now it raises concerns because it incentivises investors to exit at what they perceive as still-high prices.
Structurally, funds like this face challenges because they offer short-term liquidity while investing in long-term illiquid and hard-to-value assets. Investors who remain risk facing asset sales at unfavourable prices if redemption pressures continue to rise.