Seeking redemption

Private credit’s first real communications test

After years of rapid growth, the surge in redemption requests from private credit funds is putting pressure not just on portfolios, but on the story that helped propel the asset class’s rise. For investor relations and communications professionals across private markets, this is exactly the kind of moment that defines reputations. Bladonmore Directors, Shreena Patel and Lina Saigol, explain.

Investment narratives are rarely challenged when markets are favourable. The real test comes when investors want their money back.

That’s what’s happening now with private credit. Wealthy investors have pulled more than £20bn from private credit funds in the first quarter amid concerns of over exposure to software and technology companies.

Nothing about the structure of these funds has particularly changed of late. But a new narrative is fast developing that threatens the reputation of the entire asset class.

That shift in perception is where investor relations and communications teams now have a critical role to play – and they need to adapt fast.

Narratives are built in booms and tested in stress

For years, the appeal of private credit was easy to explain: steady income, attractive returns, diversification and insulation from the daily swings of public markets.

That outcome-focused narrative resonated with investors hunting for yield, drawing vast inflows from institutional allocators – and the rapidly expanding private wealth channel as new structures, distribution strategies and brand efforts made private credit more accessible to a broader audience.

What was once a specialist asset class was repositioned for the mainstream, and it worked: retail investor capital poured in: with participation swelling from virtually zero to around 13% of assets under management – or $280bn – in the past decade, according to a 2025 BIS report.

But much of the recent redemption pressure has been concentrated in these wealth channels, suggesting that distribution has moved faster than investor understanding.

This dynamic is increasingly being recognised. A recent webinar hosted by the Private Capital Project at Harvard Business School and the Private Capital Research Institute noted that as private markets expand into retail channels, investor behaviour changes. “During periods of market stress, retail investors may react more quickly than institutions, especially when influenced by headlines or short-term performance comparisons with public markets. This can increase redemption pressure even when underlying performance remains stable,” the panel said.

As some funds have limited withdrawals, the trade-offs at the heart of private credit – particularly between liquidity and returns – have become fully apparent. In most cases, those mechanisms are operating exactly as designed: gates, limits and notice periods are typical features, not flaws.

But the reaction – particularly among newer wealth investors – exposes a gap between expectations of liquidity and the realities of private market structures.

As journalists, regulators and market commentators have started to fill that gap, a new narrative is taking shape, often centred on opacity and liquidity risk.

Narratives matter. As Nobel Prize-willing economist Robert Shiller has argued, they play a powerful role in shaping how markets are understood and how investors behave. The question for private credit now is, which narrative will take hold?

This is where investor relations and communications teams become central. Their role shifts from telling the growth story of the asset class to explaining the mechanics of the strategy clearly enough that investors feel the risks and trade-offs were always visible.

Implications for communications

In practice, the firms that do this well tend to focus on three things.

First, they reset expectations. They state clearly that private credit is a long-term, illiquid strategy by design – rather than allowing comparisons with daily liquid assets to take hold.

Second, they replace claims with evidence. Rather than relying on general claims about income or diversification, they show the underlying portfolio: borrower mix, sector exposures, underwriting standards and how risk is managed.

Third, they explain the structure plainly. Redemption terms, liquidity gates and portfolio duration become part of the narrative rather than technical details buried in documents.

What they are really doing is closing the gap between how the strategy works and how well investors understand it.

Turning point for private markets

It would be too simple to suggest this is purely about messaging.

Conditions in private credit are evolving. Strong inflows into the asset class, combined with a slower M&A environment, are compressing yields and increasing pressure to deploy capital. At the same time, there are early signs of risk being pushed forward in the system, including the growing use of structures that defer cash interest. Much of the growth in private credit was built in a low-interest rate environment. If rates stay higher to combat inflation, default rates are likely to rise.

Nevertheless, the underlying drivers of growth remain intact. Demand for income, diversification and private market exposure are unlikely to disappear – particularly in wealth channels.

What is changing is the market’s maturity. Private credit is entering a phase every fast-growing asset class eventually reaches: where the conversation shifts from performance to understanding.

This requires investor relations and communications teams to shift focus.

For years, the industry has communicated the benefits of private credit. Less consistently explained is the structure behind those benefits – the liquidity constraints, valuation cycles and portfolio mechanics that define how these strategies behave in different conditions.

That structure is now being tested in public. While the effects are most visible in private credit, the implications extend further. Across private markets, firms are actively repositioning for a broader audience.

Educational content is being produced for first-time investors – Carlyle’s recent video explaining the history of private equity is one example. Brand-building is also becoming more prominent, with firms like Blackstone appointing high-profile ambassadors such as world number four professional golfer Tommy Fleetwood. At the same time, regulators are exploring how private assets could be incorporated into retirement plans.

These are all signals of the same shift: private markets moving into the mainstream.

As the investor base broadens, expectations change – and the margin for misunderstanding narrows.

The central communications challenge is no longer simply explaining why these assets are attractive. It is ensuring investors understand the structure behind them – before the market does the explaining instead.