Discounted offers for business-development company shares and assets are getting steeper as the monthslong wait endured by some private-credit investors eager to exit continues. The cash-out opportunities represent one upshot of the chills rippling through the private-credit industry over concerns about certain software company debt.

Secondary buyer Cox Capital Partners recently offered to purchase up to $90 million of BDC shares and assets at double-digit discounts to net asset value. The firm aims to acquire investments in five vehicles overseen by Blue Owl Capital, Ares Management, Apollo Global Management and BlackRock's HPS Investment Partners by presenting exit alternatives to liquidity-hungry investors at an average discount of about 26%.

"I have a level of confidence in the underlying portfolios but less confidence in the exit outcomes of these products," Chief Executive John Cox said of his firm's rationale for the level of discount offered. The offer is set to close Monday.

"Some [BDCs] are very heavy in software, but I think all of the software concerns are addressed through the discounts," Cox said.

A previous attempt by Cox Capital and New York hedge-fund manager Saba Capital Management to buy shares of Blue Owl Capital Corp. II at discounts of as little as 20% in February met with scant success. Investors mostly snubbed the firms, tendering less than 1% of the privately held BDC's shares to Cox and Saba.

Last year, growing fears over artificial intelligence's potential to disrupt certain software businesses drove a wave of withdrawal requests at some big nontraded BDCs, which supply credit to midmarket companies, and the rush to redeem spilled into this year. But most of the affected BDCs stuck with 5% quarterly caps on redemptions, forcing investors to wait or turn to alternative sources of liquidity. Industry participants say the withdrawal trends established in the first half will likely persist into the rest of the year.

Industry research shows redemption levels at some nontraded BDCs continued to rise into this year's second quarter. Fitch Ratings said total requested redemptions from the 15 BDCs it tracks averaged 10.3% of shares in three months ending in June, up from 9.7% in the first quarter.

Sponsor-backed software makers have been a major source of demand for private credit in recent years. Asset manager Franklin Templeton recently reported that software and information technology services companies comprise around 26% of portfolio holdings of BDCs, citing Morgan Stanley estimates. Research firm Octus Intelligence has estimated that BDCs held $152.6 billion in software investments as of last September, representing about 29% of their overall holdings. PitchBook LCD recently reported a rise in nonaccrual BDC loans, or debt that isn't paying interest.

The proportion of borrowers categorized as nonaccrual rose to 4.69% in this year's first quarter, up from 4.26% in the year-ago period, PitchBook said. The researcher's LCD unit tracks 213 BDCs with $516 billion in loans outstanding.

Fitch said recently that its U.S. Private Credit Default Rate rose to 6.1% for the 12 months through July from 6.0% in the period through June.

Offers to cash out BDC investors highlight a deeper structural tension, as recent industry data shows BDC liquidity challenges are spreading. A declining inflow trend that marked the start of the year and continued into the second quarter showed signs of a slight reversal in June, with some BDCs reporting fundraising increases from previous months.

However, the gains failed to turn around a significant overall decline for the second quarter, with inflows dropping about 56% on average from the first quarter, according to Fitch. Combined with elevated redemptions fielded by some of the vehicles, Fitch said that 12 of the 14 BDCs on its watchlist that report on fund flows had net outflows for the period.

Blackstone's Blackstone Private Credit Fund, also known as BCRED, saw inflows of $1 billion in the June quarter. But those inflows weren't enough to fully offset the roughly $2.2 billion that went back to investors.

Redemption requests rose to 10% of the BDC's shares valued at $4.4 billion during the second quarter, up from about 8% in the previous quarter. The firm stuck with its 5% limit, however. BCRED's net asset value at the end of June stood at $42.8 billion, down about 3.4% from the year-ago level of $44.3 billion.

By July, BCRED redemption requests had declined materially, which was a positive sign for the early part of the third quarter, Jonathan Gray, Blackstone president and chief operating officer, said during the New York firm's second-quarter earnings call with securities analysts.

But that easing might not last, and in any case it might not be enough to quickly and meaningfully repair the damage done since the end of last year, industry participants say.

"We will see another quarter, maybe another two quarters, of net outflows, but there is a case that that reverses quite quickly because rates are stable, spreads are better and the broader underlying markets are fine," Jeffrey Griffiths, the global head of private credit at Campbell Lutyens, said last month.

There were two main factors compelling individual investors to retrieve capital from BDCs and interval funds over the last eight months or so, Griffiths and others said. For some, returns from these holdings started to come down as base rates fell, adding to the pressure from concerns over AI disruption of software businesses.

"The [software] story has very much stabilized from the beginning of the year, when there was a lot of panic," Griffiths said.