BlackRock Inc. curbed withdrawals from one of its biggest private credit funds after client requests for redemptions spiked, the latest sign of investor anxiety about the $1.8 trillion private credit industry.
The firm's $26 billion HPS Corporate Lending Fund, one of the industry's largest non-traded business development companies, said in a statement Friday that shareholders requested 9.3% of their shares, but management decided to cap the repurchases at 5%.
The total value of shares would have been around $1.2 billion, according to Bloomberg calculations, but investors will get back about $620 million that the fund held at the end of last year.
It's the clearest instance of gating investor withdrawals among major private credit funds since late last year, when investors grew increasingly skittish about the asset class after high-profile collapses raised concerns about lending standards.
Many firms had thus far opted to meet the higher redemption requests or looked to repay investors by other means.
The firm said in the statement that the step is in line with its existing management of liquidity for the flagship direct lending retail product, known as HLEND, and a "foundational" feature of the investment.
"Without it, there would be a structural mismatch between investor capital and the expected duration of the private credit loans in which HLEND invests," it said.
The non-traded BDC offered last month to tender as much as 5% of its shares, as is typical for such business development companies. It faced withdrawals of about 4.1% in the prior period.
BlackRock shares fell more than 7% in New York on Friday morning, facing similar declines to alternative asset managers KKR & Co. and Ares Management Corp., which have had the worst start to a year in a decade.
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 as part of the firm's effort to expand further into private assets.
HPS executives said Friday the step to restrict redemptions would help the fund buy into "compelling investment opportunities" amid uncertainty and volatility.
A separate BlackRock private credit fund, with about $2.2 billion in assets at the end of last year, also disclosed Friday that investors asked to redeem 4.5% of their shares. The vehicle, called BlackRock Private Credit Fund, will meet all those requests.
Other asset managers have taken steps to avoid gating withdrawals like HLEND.
Earlier this week, Blackstone Inc.'s flagship private credit fund fulfilled requests to tender a record 7.9% of shares, partly by having the firm and employees step in to offset some of the withdrawals.
In January, Blue Owl Capital Inc. let investors in one of its technology-focused funds cash in about $527 million of shares, or roughly 15% of the fund's net assets.
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