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Cox Capital Partners Faces Rejections for Discounted Private Credit Shares
Cox Capital Partners, a Philadelphia-based secondary liquidity provider, has made unsolicited offers to buy shares in non-traded business development companies (BDCs) at an average discount of 26% below net asset value. The firm has targeted up to $90 million in shares across five funds managed by prominent firms such as Blue Owl Capital and Apollo Global Management. However, fund boards and shareholders have collectively declined these offers, opting instead to encourage investors to utilize the funds' own repurchase programs.
The surge in redemption requests from investors has created a liquidity squeeze in non-traded BDCs, which are marketed as 'semi-liquid' investment vehicles. In the second quarter of 2026, redemption demands reached 10.3% of outstanding shares, significantly exceeding the typical buyback cap of 5% per quarter. This backlog has left many investors frustrated and seeking exit options, prompting Cox Capital to position itself as a potential solution, albeit at a steep discount.
Despite the attractive pricing, fund boards have pushed back against Cox's offers. For instance, the HPS Corporate Lending Fund rejected an offer of $18.40 per share, which was significantly lower than its stated net asset value of $24.53. Fund boards have consistently advised investors to wait for the funds' buyback queues rather than accept substantial losses from secondary buyers like Cox.
The increase in redemption requests is partly driven by concerns over credit quality, particularly in the software sector, which has heightened investor anxiety regarding the ability of mid-market borrowers to service their debts. As Cox Capital plans to extend its offers into the interval fund market, valued at approximately $131 billion, the ongoing redemption backlogs raise questions about the reliability of net asset value figures and investor confidence in private credit products.
Source: KLEA News