When compared to the trillion-dollar balance sheets of Blackstone or Apollo, Evolution Capital Management, a Harvard spinout, has surpassed $4 billion in assets under management. However, when you take into account the market it currently operates in, this milestone may seem insignificant. The year for private credit is not going well. According to Fitch Ratings, the private credit default rate for U.S. corporate borrowers reached a record 9.2% in 2025. For non-traded private credit vehicles, Moody’s has changed its forecast to negative. One vehicle saw 41% of redemption requests at Blue Owl’s funds, while another saw 22%. The $3.5 trillion asset class is quickly realizing that the second half of its ten-year promise of equity-like returns with bond-like volatility may have been overly optimistic.

Evolution is expanding in that setting. From the outside, it’s not always clear whether the timing is extremely fortunate or extremely well thought out. The company’s positioning around what analysts refer to as HALO investing—Heavy Assets, Low Obsolescence—does seem to be intentional. The concept is simple, but its implementation is not: the strategy concentrates on tangible assets with long economic lives rather than lending to software companies whose revenue models are currently being renegotiated by AI. infrastructure. data centers. physical items that don’t go out of style when a new model is released. A company positioned against that exposure occupies an interesting position in a market where major funds’ exposure to software-company loans—the same software loans on which JPMorgan subtly marked down collateral earlier this year—is the main cause of institutional anxiety.

Instead of collapsing abruptly, the larger private credit crisis has the feel of a gradual unwinding. The Blue Owl situation, which started last fall when redemption requests at one of its non-traded business development companies grew to the point where the company tried a merger to handle the issue—a merger it later abandoned due to the losses it would have caused investors—was one of the triggers. The episode sparked concerns about the underlying loans’ health, which quickly gained traction. Elevated redemption requests were made by investors at BDCs managed by Apollo, Ares, Blackstone, BlackRock, and Morgan Stanley. The funds mostly refused to fully honor them, citing caps intended to safeguard all investors. In addition to acknowledging that the pressure is genuine, Blackstone did consent to a record 7.9% withdrawal from its flagship private credit fund.

The crisis has caused a slightly different kind of anxiety for institutional investors, such as pensions, endowments, and university funds. The non-traded BDCs that have been the focus of the drama do not contain the majority of them. However, they are observing while in private credit. The chief investment officer of the $60 billion Illinois Municipal Retirement Fund, Angela Miller-May, explained that she had to give Blue Owl a call to make sure her fund’s investments in Atalaya, a company that Blue Owl purchased in 2024, were distinct from the problematic vehicles. They were. However, the very fact that she had to make that call is a type of data point in and of itself.

Evolution’s positioning subtly recognizes the structural nature of the deeper issue. Valuations are usually updated on a quarterly basis by private credit funds. The value of the loans is frequently determined by the same individuals who originated them. That arrangement is referred to as a feature—low volatility, steady returns—when everything is rising. Former Fidelity fund manager George Noble put it simply when credit began to deteriorate: “It’s a trapdoor.” Even more blunt was John Zito, co-president of Apollo’s asset management division, who told UBS clients, “I literally think all the marks are wrong.” A short seller’s perspective is not out of the ordinary. It is the co-president of one of the leading companies in the sector.

Observing Evolution’s rise against this background gives one the impression that the company gains from both its investments and its non-investments. This company doesn’t have a legacy software loan book that requires an explanation. It is not handling the conflict between fund structures intended to restrict transparency and institutional clients who seek it. It emerged from Harvard with a particular thesis at a particular time, and the market has advanced toward that thesis more quickly than most people anticipated. There are still genuinely unanswered questions about whether $4 billion turns into $10 billion and whether the HALO strategy can withstand a full credit cycle. However, staying out of the conversation is a competitive advantage in a market where the biggest names are handling redemption crises and defending their valuation methodology to dubious journalists.

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