Asset manager BlackRock’s BLK-N 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 AI 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.
“Overall, we expect BLK to trade positively today on the back of this release,” he said. BlackRock shares were up 2.4 per cent.
HLEND, one of the largest U.S. non-traded private credit funds, has bought back roughly US$1.7-billion of shares across three repurchase periods ended June 30. For the latest tender offer, it was about US$600-million.
The fund said 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 annualized total net return through July 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 the third quarter, 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 third-quarter redemption season for major U.S. non-traded private credit funds last week.
Late Thursday, TPG Twin Brook Capital Income Fund 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.