Why Cox Capital's BDC Tender Offers Are Priced 15% to 30% Below NAV

TL;DR: Cox Capital Partners is offering cash tender offers to investors trapped in three gated private-credit BDCs: HPS Corporate Lending Fund (HLEND), Apollo Debt Solutions BDC (ADS), and Ares Strategic Income Fund (ASIF), at discounts to net asset value (NAV) of 25%, 30%, and 15% respectively, according to Citywire's reporting on the offers. If you own shares in one of these funds and can't get your money out through the normal 5%-per-quarter repurchase program, this is the market telling you exactly what "I need cash now" costs.

I want to walk you through a specific transaction happening right now, because it's the cleanest real-world lesson in liquidity pricing I've seen in the private-credit space this year. Three of the largest business development companies (BDCs) in the country, funds run by HPS Investment Partners, Apollo Global Management, and Ares Management, have investors lined up trying to get out faster than the funds' own rules allow. A firm called Cox Capital Partners has stepped in with cash offers to buy those investors out. The catch: you'd be selling at 15% to 30% below what the fund says your shares are worth.

That gap is not a mistake and it's not a lowball insult. It's a price. Understanding why it exists, and whether you should take it, is the whole point of this piece.

What a "gated" BDC actually is

A business development company is a closed-end fund, regulated under the Investment Company Act of 1940, that lends money directly to mid-sized private companies: the kind of borrowers too small or too levered for a syndicated bank loan. Most of the BDCs raising money from individual investors today are non-traded, meaning there's no stock exchange where you can sell your shares to another buyer. Instead, the fund itself agrees to buy back a limited slice of shares every quarter, priced at NAV, the fund's own calculation of what its loan portfolio is worth per share.

That slice is capped, almost universally, at 5% of shares outstanding per quarter. The 5% figure isn't a law. It's an industry convention that started with the first perpetual non-traded BDCs and stuck because it let managers meet routine redemption demand without being forced into fire-sale loan liquidations. Fitch Ratings analyst Chelsea Richardson has called it a "Goldilocks solution," small enough to protect the fund from a run, large enough to look like real liquidity when things are calm, as PitchBook detailed in its March 2026 report on the gating debate.

Here's the mechanic that catches people off guard. When redemption requests in a given quarter exceed 5% of shares, the fund doesn't fill your request in full. It prorates. If total requests come in at 15% of shares and the cap is 5%, you get roughly one-third of what you asked to redeem, and the rest rolls into a queue for future quarters, with no guarantee those future quarters will be any better. This is what "gating" means. It's built into the prospectus you signed, and it is functioning exactly as designed. That doesn't make it comfortable when you're the one waiting.

This is exactly the situation now facing three of the industry's largest funds. HLEND, the $24.8 billion HPS Corporate Lending Fund, saw redemption requests hit 13.3% of shares in the second quarter of 2026, nearly triple its cap, and the fund said in June it would pay out about $620 million, or 5% of shares outstanding, leaving the rest of the requests unfilled. Apollo's $14.6 billion ADS fund got hit with requests of roughly 16.8%. Ares' $10.8 billion ASIF fund saw about 14.4%. All three gated at 5%, per Citywire. And they aren't isolated. Data compiled by Robert A. Stanger & Co. found that more than $14.5 billion of investor capital was trapped behind withdrawal caps across more than a dozen private-credit funds in that same quarter, against roughly $8.6 billion actually returned to investors, as reported by the Business Times. This is not a one-fund problem. It's a structural feature of the entire semi-liquid BDC category showing up under stress at the same time.

The legal backbone here matters too. Under Section 61(a) of the 1940 Act, a non-traded BDC that wants to operate with lower asset coverage, meaning it can carry more leverage, has to offer shareholders a standing repurchase mechanism. SEC staff guidance from 2019 confirmed funds can structure this as quarterly offers priced at the fund's current NAV at the time of repurchase, not the NAV when the offer was made, as laid out in the SEC's own FAQ on BDC repurchase obligations. The rule guarantees you an opportunity to ask for your money. It does not guarantee you'll get it on your schedule.

What a third-party tender offer is, and how it's different

A third-party tender offer is a separate, optional transaction that has nothing to do with the fund's own repurchase program. An outside buyer, in this case a secondaries fund run by an affiliate of Cox Capital, offers to buy your shares directly, for cash, right now, at a price the buyer sets. You're not selling to the BDC. You're selling to a third party who then holds your shares, or resells them later, and takes on the job of waiting for the fund's own quarterly process, or a future sale, to eventually realize full NAV.

Cox Capital has been explicit that this doesn't touch the underlying fund's mechanics at all. As the firm put it in its statement, the offer "does not modify or replace" any fund's repurchase program. It's an additional, optional exit route running parallel to it, per Citywire's report. You can still submit your normal redemption request to HPS, Apollo, or Ares and take your chances in the quarterly queue. The tender offer is a second, faster door, and Cox is charging admission for opening it now instead of later.

Cox Capital's CEO, John Cox, framed the pricing as a reflection of three inputs: portfolio quality, liquidity characteristics, and observable discounts on comparable listed BDCs trading in the public market, not a judgment call on the funds' health. That's a credible framework, and it lines up with what's actually happening in the public BDC market, which I'll get to below. But "credible framework" and "good deal for you" are two different questions.

The Cox Capital offers, side by side

Fund	Sponsor	Fund size	Q2 2026 redemption requests	Cox Capital tender discount to NAV
HPS Corporate Lending Fund (HLEND)	HPS Investment Partners	$24.8 billion	13.3%	25%
Apollo Debt Solutions BDC (ADS)	Apollo Global Management	$14.6 billion	16.8%	30%
Ares Strategic Income Fund (ASIF)	Ares Management	$10.8 billion	14.4%	15%

Notice the discounts don't track cleanly with the size of the redemption backlog. ASIF, despite a comparable overshoot to the other two funds, gets priced the shallowest, while ADS carries the steepest discount. That mismatch is informative: Cox is pricing perceived portfolio risk and marketability, not simply how big the exit line is.

This also isn't Cox's first attempt at this trade. Earlier, alongside Saba Capital, Cox offered gated investors in Blue Owl Capital Corporation II (OBDC II) a tender at a discount near 35% to NAV. Investors rejected it, according to Citywire. That rejection tells you something: even investors stuck in a gate with no immediate alternative decided a 35% haircut was too steep to swallow. Keep that outcome in mind as a data point, not a rule. The ASIF discount here, at 15%, is priced closer to what public-market comparables actually show, which may change the math for that fund's shareholders.

Why the discount runs 15% to 30%, and what it's actually pricing

Three forces are stacked into that discount, and none of them are irrational.

The illiquidity premium. The buyer is putting up cash today for an asset that will take, realistically, a year or more to fully monetize at stated NAV. Barclays analysts estimated that funds facing this kind of backlog could take up to eight quarters to clear the redemption queue at current pace, per the Business Times. A buyer locking up capital for two years at a 5% quarterly cap needs to earn a return on that wait. The discount is the price of that time value, similar to how a bond trading below par compensates a buyer for holding to maturity.

Information asymmetry and mark skepticism. BDC NAVs are fair-value estimates built on internal models, not daily market quotes. When a lot of investors want out at once, that's often a signal the market doesn't fully trust the marks. Reuters reported in April 2026 that publicly traded BDCs, the ones with real, continuous market pricing, were trading at a median discount of roughly 26% to forward NAV, the widest gap since October 2020, amid growing skepticism about whether reported NAVs reflect real stress in the underlying loans, according to Reuters. That's the key number to hold onto. The private, non-traded funds say their shares are worth 100 cents on the dollar. Their closest publicly traded cousins, priced by actual buyers and sellers every day, say something closer to 74 cents. Cox's discounts sit inside that same band.

The buyer's required return. Cox isn't a charity. It's running a fund that needs to generate a return for its own investors, and it's taking on real risk: that a fund's true NAV falls further before it can exit, that redemption queues stay clogged longer than expected, that leverage inside the BDC amplifies any credit deterioration. Mercer Capital's analysis of the earlier Saba/Cox offer for OBDC II noted that leverage "magnifies discounts to NAV when the market assesses that asset values are less than the marked value," which is the same dynamic showing up here, per Mercer Capital's report. The 25-30% discounts on HLEND and ADS are pricing in more of that risk than the 15% discount on ASIF, which suggests Cox sees comparatively cleaner collateral quality there.

None of this means the funds are in trouble in a credit sense. Dividend coverage at all three funds has stayed above 100% and nonaccruals remain contained, by most current reporting. What's stressed is the liquidity structure, not necessarily the loan book, a distinction that matters enormously for your decision and one that's easy to blur when you're anxious to get your money back.

Why most investors don't see this coming until it's too late

I'll be blunt because it's the actual root cause of every headline in this space this year. Most people who bought into a semi-liquid BDC through a financial advisor or a wealth platform were sold on the yield and told, correctly but incompletely, that there's a quarterly redemption window. What they weren't told with enough emphasis is that the window has a cap, the cap can be hit, and when it's hit you don't get your money. You get a fraction of it and a place in line. DoubleLine's Jeffrey Gundlach called the "semi-liquid" label applied to these funds "diabolical" at the Milken Institute conference this year, arguing retail investors weren't given adequate disclosure about what that liquidity actually means in a stress scenario, a characterization reported by Lumida News. I don't love the word "diabolical," but the underlying point is fair: the product's illiquidity is a feature, not a disclosure footnote. It should be priced into your decision to buy on day one, not discovered on the day you try to leave.

Checklist: take the discounted tender, or wait it out

• Do you actually need the cash, or do you just want it? A discount of 15% to 30% is a real, permanent loss versus stated NAV. If you have another six to twelve months of runway before you need this money, that's expensive insurance to buy against uncertainty.
• Have you checked what comparable listed BDCs are trading at right now? If publicly traded peers are sitting at a 20-26% discount to NAV, per Reuters, a tender at 25-30% isn't wildly out of line with what the broader market says private credit is worth today, even if it stings.
• Do you believe the fund's stated NAV, or do you suspect it's stale? If you think the marks lag reality and true value is meaningfully below stated NAV, a 15-30% haircut might be closer to fair than it looks. If you trust the marks and think this is pure liquidity panic, waiting costs you less.
• How deep is the redemption backlog at your fund, and is it growing or shrinking? ADS's ask grew from about 11% in Q1 to 16.8% in Q2. A worsening trend argues for less patience. A cooling trend argues for more.
• What's your realistic queue-clearing timeline? At a hard 5% quarterly cap with no proration relief, a 16.8% ask takes more than three quarters just to clear the existing backlog, assuming no new requests pile on behind you. Run that math for your specific fund before assuming next quarter solves anything.
• Is your advisor pushing you either direction, and do they have a stake in the outcome? Ask directly whether they or their firm have any relationship with the tender offeror, or an incentive tied to keeping assets in the original fund.
• Would you buy this fund today, at NAV, if you weren't already in it? If the honest answer is no, that's a strong signal to take liquidity where you can get it, discount included.

I'll leave you with the plainest version of the trade-off. The fund is telling you your shares are worth 100. The market, through Cox's offer and through the pricing of every comparable listed BDC, is telling you cash today is worth somewhere between 70 and 85. Both numbers can be "correct" depending on your time horizon. Your job is to figure out which one actually applies to you, not which one you'd prefer to be true.

Related on AIN: See the 2026 BDC redemption crisis. our BDC due-diligence checklist. 9fin's new BDC watchlist data. why private credit is now a top SEC exam priority.

Author Disclosure: Jeff Barnes, MBA has no personal position in any company, fund, or platform named in this article. Angel Investors Network has no current commercial relationship with any party mentioned. AIN provides marketing and education services, not investment advice. Past performance does not guarantee future results. All investments involve risk, including loss of principal.