BlackRock’s US$26 billion private credit fund limits withdrawals

[NEW YORK] BlackRock curbed withdrawals from one of its biggest private credit funds after client requests for redemptions spiked, the latest sign of retail anxiety about the US$1.8 trillion private credit industry.

The firm’s US$26 billion HPS Corporate Lending Fund, one of the industry’s largest non-traded business development companies, said shareholders requested 9.3 per cent of their shares, but management decided to cap the repurchase at 5 per cent, the company said in a statement on Friday (Mar 6). The total amount of shares would have been around US$1.2 billion, according to Bloomberg calculations.

The firm said the step is in line with its existing management of liquidity for the fund and a “foundational” feature of the fund.

“Without it, there would be a structural mismatch between investor capital and the expected duration of the private credit loans in which HLEND invests,” the company said in the statement.

The non-traded BDC, known as HLEND, offered last month to tender as much as 5 per cent of its shares, as is typical for such business development companies. It faced withdrawals of about 4.1 per cent in the prior period.

Private credit funds broadly are bracing for a wave of redemption requests as angst grows around the industry’s lending practices and exposure to businesses that could be upended by artificial intelligence. HPS Investment Partners is one of the largest alternative credit managers and was purchased last year by BlackRock.

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Earlier this week, Blackstone’s flagship private credit fund fulfilled requests to tender a record 7.9 per cent of shares, partly by having the firm and employees step in to offset some of the withdrawals.

In January, Blue Owl Capital let investors in one of its technology-focused funds cash in about US$527 million of shares, or roughly 15 per cent of the fund’s net assets, according to a regulatory filing. BLOOMBERG