As strains in the private credit market intensify, Jim Cramer is warning that private equity firms may be forced to sell assets at less-than-ideal prices to stay ahead of a deepening crunch.
The veteran market commentator and former hedge fund manager took to X.com to say that the private credit “crisis” made private equity firms “wake up” to the fact that “they better start selling stuff, even if they aren’t going to get great prices.”
“Flora from KKR, a food group stock! Egads. But you gotta sell something. Right Blue Owl?” he posted.
KKR & Co. announced that it is working with investment bankers to explore a $10 billion sale of Flora Food Group. The private equity firm previously tried to offload Flora in 2024 to an Abu Dhabi sovereign wealth fund, but the deal collapsed over a pricing dispute.
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Cramer’s remarks come at a time of growing instability in the private credit market, where investors are increasingly wary of rising default risks, elevated interest rates, and the potential for AI-driven disruption across the software sector.
In response, major firms such as Blue Owl Capital and Blackstone Inc. have started limiting redemptions to shield their portfolios from forced asset sales.
Meanwhile, Morgan Stanley curbed redemptions after investors sought to withdraw nearly 11% of shares from its North Haven Private Income Fund, and JPMorgan Chase & Co. has begun restricting lending to software companies in its private credit funds.
BlackRock Inc limited withdrawals from its $26 billion HPS Corporate Lending Fund after redemption requests surged to 9.3% of the fund’s net asset value.
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The ripple effects are being felt across private equity, where firms are finding it harder to exit investments as the seller’s market cools. At the same time, mounting pressure to return capital to investors is intensifying, with constrained credit conditions making it more difficult to finance new deals.
Cramer has expressed similar concerns about the private credit market in the past, previously stating: “Unlike the housing/mortgage crisis in 2007-8, there is a solution to the private credit situation: take the hit. The vast majority of companies are solvent, so sell them, take some losses. Don’t get Dead!”
Photo: Shutterstock
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