April 6 (Reuters) – Goldman Sachs’ private credit fund said on Monday investors requested to repurchase just under 5% of shares in the first quarter, staying within its cap and defying a broader rise in redemption requests across the sector.
Fears that artificial intelligence could erode the earnings power of software companies and weaken their ability to repay loans are spreading through the private credit industry, a key lender to the technology sector, prompting investors to reassess their exposure, redemption risks and fundraising prospects.
Several asset managers have capped redemptions at the standard 5% quarterly limit after a recent surge in withdrawal requests, driven by negative headlines that have put the roughly $2 trillion private credit industry under scrutiny over lending standards, valuations and transparency.
Goldman’s ability to meet all redemption requests while remaining below its cap suggests stress is not uniform across the sector, with investors continuing to back managers they view as better positioned to weather volatility.
The Wall Street firm said the redemption requests, which were fulfilled and below its quarterly repurchase cap, were the only ones among peers to come in below the limit.
“We believe these results highlight the strong position of GS Credit relative to the broader non-traded BDC (Business Development Company) industry,” it added in a regulatory filing.
NOT ALL THE SAME
Shares of alternative asset managers have sold off this year as concerns over risks in private credit weigh on sentiment. Morgan Stanley, BlackRock and Apollo Global are among those that have capped redemptions in recent weeks.
Goldman said it operates in the same market as other BDCs and is not insulated from industry dynamics, but has diversified its capital sources by maintaining an institutionally oriented private credit platform.
“While retail and some wealth management investors are pulling back from private credit, we believe many institutional investors are recognizing this dislocation as an attractive entry or re-entry point into the asset class,” the Wall Street firm added.
It also disclosed that the fund generated roughly $823 million in proceeds from repayments and sales of portfolio investments, up from $669 million in the previous quarter.
PROACTIVELY LOOKING AT AI
Investors have been grappling with the prospect of AI disruption for weeks, with growing concern that the technology has shifted from an efficiency and productivity tailwind for the software sector to a potential existential threat.
Goldman said it has been assessing the impact of AI on the software sector for years, adding that it passed on its first deal due to such concerns in October 2023 and rolled out an internal framework to evaluate AI disruption risk in early 2025.
“While we approach the topic of AI with humility and will continue to evolve and pressure-test our framework as new datapoints emerge, we believe the impacts of AI (both negative and positive) will be nuanced and company-specific,” the Wall Street giant said.
Its software portfolio is well positioned for the AI era, the bank added, but acknowledged that companies must invest ambitiously in their AI roadmaps to protect their legacy businesses.
(Reporting by Manya Saini in Bengaluru; Editing by Shinjini Ganguli and Tasim Zahid)
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