Auction could give evergreen fund investors a way past quarterly caps

An auction for evergreen fund shares could become a way to cash out when a fund prorates redemption requests, WealthManagement.com reported on Oct. 22. The report framed it conditionally: "there might be a new mechanism," it said, that could let holders get out without hitting a redemption cap or selling at a large discount to net asset value.

Evergreen funds typically limit quarterly redemptions to 5% of net asset value. That limit became the live issue in late 2025, when worries about the assets inside private credit BDCs pushed requests past the cap at multiple managers, according to the report. Some managers temporarily met higher redemption levels. Blue Owl Corp. halted quarterly redemptions and replaced them with periodic distributions funded by asset sales and loan repayments. Requests have since slowed, and private placement BDCs have met most of them.

For an advisor with a client in an evergreen sleeve, the cap sets the cash-flow schedule: 5% of a $10 million position is $500,000 a quarter at NAV. The rest of the position waits in the queue or sells at whatever discount a buyer demands. Two funds can print the same 5% cap and hand a client different cash timing, because the manager's response in the quarter the cap was breached — meeting requests, pausing them, or paying out from asset sales — is not written into the cap.

Routes out of a semiliquid fund outside scheduled windows predate this. NAV REITs, which drew heightened redemption requests in 2023, had platforms such as Realto Inc. — now LODAS Markets — that let non-traded REIT investors take part in secondary liquidity events, the report said. Cox Capital Partners and Saba Capital Management turn up when a semiliquid vehicle appears to be under redemption pressure, making unsolicited offers for oversubscribed shares at a discount. For most investors those discounts are too large to make the deals worthwhile, according to analysts across the industry cited in the report.

The example the report gives is from March. Cox and Saba launched an unsolicited tender offer for 6.9% of the shares of Blue Owl Capital Corporation II (OBDC II), a non-traded private credit BDC, at a proposed discount of 34.9%. The report groups that offer with similar ones for non-traded private credit BDCs managed by HPS Investment Partners, Apollo Global Management and Ares Management.

The 34.9% is the number to hold on to. It is a buyer's price for shares the fund carries at net asset value, and a gap that wide is a disagreement about what the portfolio is worth rather than a measurement of it. The analysts' read, as the report gives it, is that the discount is wide enough that a sale is not worthwhile for most holders, which suggests the alternative they weigh is the redemption queue. That makes the queue the benchmark any auction has to beat.

The tension the report describes is structural: investors want evergreen exposure, and the liquidity these vehicles offer is capped by design. A quarter that breaches the cap is where the two meet. The price of getting out early is then set by whoever will buy: for the OBDC II shares, 34.9% below net asset value.