Private Credit: The Breit Effect

One Mar-a-Lago dispatch to start: Wall Street chiefs and hedge fund managers attended a summit this week hosted by Donald Trump’s sons to convince the world’s elite that more than a year after the 2024 elections, their crypto venture should be viewed as a global power player.

Another thing: The owners of Aggreko are pushing ahead with plans to either list the power supplier in the US or sell a stake in a move that could value the business at more than $12bn.

And a podcast: Partners Group pioneered private equity for individual investors. But as US President Donald Trump unlocks that marketplace on an even grander scale, Partners might not be the one to reap the rewards, DD’s Antoine Gara and Alexandra Heal explain on the FT’s Behind the Money podcast.

In today’s newsletter

• Blue Owl renews credit fears

• Nestlé’s ice cream exit

• An Epstein-linked collapse

Redemption for private credit?

Since September, private credit markets have been roiled by a series of mini crises. It started with the implosion of ultra-leveraged car parts roll-up First Brands and continued this week with news from Blue Owl that sent private capital stocks plunging.

The over $300bn in assets private credit giant said on Wednesday it would halt the ability for investors to redeem their shares from its inaugural non-traded retail private credit fund, Blue Owl Capital Corp II (OBDC II), at its stated valuation every quarter.

Blue Owl closed the fund to redemptions in November as part of a deal to merge it with a far larger publicly traded credit fund it manages, but quickly backtracked on the deal after an FT report highlighted that investors would face paper losses.

When abandoning the merger, Blue Owl said it would allow investors to begin redeeming shares at their discretion beginning in the first quarter of 2026.

But on Wednesday, it ended that policy as part of a $600mn sale of assets from the fund, which it said would in effect return 30 per cent of their invested cash.

Blue Owl sank sharply, while other private capital firms with large credit operations such as Blackstone, Apollo Global Management, Ares Management and KKR also fell.

February had already brought a bad vibe for private markets.

The month began with Anthropic’s release of new AI tools that sent software stocks tumbling amid fears that once “sticky” subscription software businesses risk being made obsolete.

Investors then turned their attention to private capital groups. Such wonky IT companies represented about 40 per cent of new buyout deals and 30 per cent of private credit loans over the past decade, according to Apollo, which cut its exposure in 2025 due to AI fears.

Now, Blue Owl, among Wall Street’s most active technology lenders, is creating new waves.

Private capital chieftains such as Blue Owl co-founder Marc Lipschultz have said the fears are overdone. Private credit defaults remain low, portfolios are performing well, and even intensely scrutinised software businesses continue to grow.

But the market has dismissed the sanguine outlook of many private credit leaders. Meanwhile, investors can vote with their feet.

The lifeblood of the private credit boom has been private retail funds like OBDC II, which offered the trade-off of limited liquidity rights for the ability to invest in higher-yielding private loans.

Now, many investors are redeeming their investments due to anxiety about their loan portfolios. Falling interest rates and tightening credit spreads have also eaten into the industry’s once “golden” returns.

This dynamic creates the risk that even if defaults don’t manifest, private credit funds could face rising pressure as they manage investors’ contractual right to pull their money.

Blackstone’s Breit property fund faced this issue in 2022 when fears over property valuations caused heavy redemptions and forced it to limit withdrawals.

Blackstone ultimately passed its test, selling more than $30bn in assets above their marks, and investors have renewed pouring billions in new cash into the fund amid solid returns.

One of the defining stories for Wall Street this year will be whether embattled private credit funds such as OBDC II can pull off a similar feat.

Nestlé’s melting ice cream deal

Two of the biggest stories for investors right now are AI upending software and weight-loss drugs hitting consumer businesses like fast food and snacks companies.

While it’s not yet clear who the winners and losers will be from the AI disruption, it seems pretty obvious that appetite-quelling injections are a major problem for, say, ice cream sales.

It wasn’t such a shock then on Thursday when Nestlé announced it’s selling its remaining ice cream businesses.

The Swiss multinational is in “advanced negotiations” to sell its ice cream assets to Froneria joint venture Nestlé established with the French private equity firm PAI Partners in 2016.

The question now is what happens to Froneri, the owner of brands such as Häagen-Dazswhich DD readers will recognise for not one but two continuation fund deals through which PAI has extended its investment in the ice cream maker. (Nestlé also has a 50 per cent stake in Froneri.)

The first was in 2019 when PAI put part of its 50 per cent stake in Froneri into a continuation vehicle in an attempt to benefit from the joint venture’s growth as Nestlé’s US brands were brought under Froneri’s umbrella.

Then, last year, PAI established yet another continuation vehicle for its Froneri investment in one of the biggest transactions of its kind. Goldman Sachs’ asset management division was the lead investor in that fund, buying into the ice cream maker at a €15bn valuation.

Froneri may be facing the realities that have led many private equity firms to shun consumer goods. The PE investment cycle is long but consumer taste (or the lack thereof) can change on a dime.

With drugs like Wegovy in the picture, the exit looks even trickier.

The latest Epstein casualty

Some opponents of the release of the Epstein files warned the documents could damage the reputations of anyone whose name appeared — regardless of whether they were implicated in the deceased sex offender’s sordid activities.

Jeffrey Epstein’s published correspondences did in fact expose a vast social and professional network. At first it wasn’t clear if the people wrapped up in his life and finances would be hurt by the association. But in recent weeks the heads have begun to roll.

Among those who have tendered their resignations are Goldman Sachs general counsel Kathy Ruemmler, Hyatt executive chair Thomas Pritzker, DP World chair and chief executive Sultan Ahmed bin Sulayem, Paul Weiss chair Brad Karp (who is staying at the firm as a partner), with surely more to come.

And in one of the biggest Epstein-induced downfalls yet, the FT scooped on Thursday that Global Counselthe advisory firm founded by Peter Mandelsonis set to enter administration.

The files showed the UK Labour Party politician appeared to have received payments from Epstein and leaked him plans for a bailout of the euro.

He and co-founder Benjamin Wegg-Prosser also sought advice from Epstein on how to launch Global Counsel in 2010, including while Epstein was still under probation on house arrest in New York over having spent time in jail for soliciting prostitution from a minor. The firm has advised large companies, including JPMorgan, Palantir and Anglo American.

People at the company told the FT that chair Archie Norman and chief executive Rebecca Park told staff on Thursday that the “Peter Mandelson legacy” had led to the business’s collapse.

The millions of pages of already-released documents may only make up a portion of the trove generated during criminal investigations into Epstein. With the extensive damage already wrought, DD wonders who’s worried they wouldn’t survive another document dump.

Job moves

• New Diageo chief executive Dave Lewis is planning a major shake-up of his executive team, as the former Tesco boss moves to stamp out the ailing drinks giant’s “fat and happy” culture.

• Bank of America has named Anand Melvani head of private credit, global capital markets and Scott Wiate head of private credit, structuring and underwriting.

• Madison Square Garden Sports chief financial officer Victoria Mink is leaving and the company will launch a search for her successor. MSG is weighing a split of its professional sports franchises the New York Knicks and the New York Rangers into separate publicly traded companies.

Smart reads

Goodbye, collateral Stock-backed lending is booming, but the case of Mexican billionaire Ricardo Salinas Pliego shows how it can quickly go bust, the FT reports. The tycoon claims he was defrauded by a lender that sold his shares and used the proceeds to advance his loan.

Fine print Hamilton Lane is a private capital giant with an “accounting-driven investment strategy”, FT Alphaville writes. If you wade through the legalese you’ll see that the firm’s fee structure is especially, what you might call, clever.

My fault Former Sony chief executive Michael Lynton’s desire to fit in led him to make a rash decision that culminated in the infamous Sony hack, he writes in an excerpt from his new book in The Wall Street Journal.

News round-up

Nvidia and OpenAI abandon unfinished $100bn deal in favour of $30bn investment (FT)

Saudi-owned Scopely strikes $1bn deal for Turkish game developer (FT)

Orange CEO warns there is ‘no incentive for investment’ in Europe (FT)

Rio Tinto defends growth prospects after failed Glencore talks (FT)

Meta cuts staff stock awards for a second straight year (FT)