BlackRock private credit fund redemption requests ease in Q3
This could be an early sign of easing redemption pressures across the industry
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[NEW YORK] Asset manager BlackRock’s flagship private credit fund received fewer withdrawal requests in the third quarter than in the previous period, offering an early sign that redemption pressures across the industry may be easing.
Wealthy individuals have retreated from non-traded private credit funds this year over concerns about lending standards and the potential impact of artificial intelligence on software companies, a key borrower base for direct lenders.
Although, the redemption pressure may be starting to ease as asset managers work through a backlog of unfulfilled withdrawal requests.
Investors in BlackRock’s US$23.1 billion HPS Corporate Lending Fund sought to pull roughly 11.5 per cent of shares, compared with 13.3 per cent in the prior quarter, according to a regulatory filing on Friday. It will repurchase 5 per cent of shares, the customary threshold for such vehicles.
“The redemption backlog is now clearing. This is another encouraging data point on direct lending sentiment in the wealth channel, and we expect redemption trajectory for the BDC group (business development company) to decelerate,” Evercore analyst Glenn Schorr said.
HLEND, one of the largest US non-traded private credit funds, has bought back roughly US$1.7 billion of shares across three repurchase periods ended Jun 30. For the latest tender offer, it was about US$600 million.
The fund said that its underlying portfolio company performance remains strong, and its portfolio remains highly diversified. Since inception, its Class I shares have delivered a 9.9 per cent annualised total net return through Jul 31, representing a 3.5 per cent premium to broadly syndicated loan total returns.
Outflows from BlackRock’s other smaller vehicles also showed signs of easing. Withdrawal requests at BlackRock Private Credit Fund fell to 4.58 per cent in Q3, from roughly 5.3 per cent in the prior quarter, while that in HPS Corporate Capital Solutions Fund dropped to 1.9 per cent from 4.7 per cent.
Blackstone kicked off the Q3 redemption season for major US non-traded private credit funds the previous week.
TPG Twin Brook Capital Income Fund recently disclosed repurchase requests fell to 1.2 per cent from 2.1 per cent in the prior quarter. Other vehicles are also expected to release data throughout September. REUTERS
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