Blackstone’s $77bn private credit fund keeps 5% redemption limit
Blackstone’s flagship private credit vehicle is maintaining its 5% quarterly redemption limit after investors sought to withdraw around 10% of the fund during Q3, highlighting continued liquidity pressure across the non-traded private credit market, according to a report by Reuters.
The Blackstone Private Credit Fund (BCRED), which has approximately $77.2bn in assets, received about $4.3bn in repurchase requests for the quarter. The fund will honour 5% of outstanding shares, in line with the standard quarterly limit for the vehicle.
The level of redemption requests was broadly in line with the previous quarter, when investors also sought to withdraw roughly 10% of their holdings.
The sustained demand for liquidity comes as private credit faces growing scrutiny over underwriting standards and the potential impact of artificial intelligence on software companies, which represent an important segment of the direct lending market.
BCRED recorded net outflows of approximately 3% during the quarter, with new investor demand generating close to $750m of inflows.
Blackstone said other private wealth products have experienced stronger fundraising momentum compared with the second quarter, suggesting that investor appetite for alternative assets has not weakened uniformly across the firm’s platform.
The latest figures also underline the extent of the redemption backlog facing BCRED.
The fund received around $4.5bn of repurchase requests in the second quarter but was able to fulfil only about half of them, leaving approximately $2.3bn outstanding. A significant portion of those investors submitted requests again during the latest tender period.
Blackstone said investors who requested liquidity in the second and third quarters are expected to have received approximately 75% of their requested capital once the latest repurchases are taken into account.
The manager maintained that BCRED remains well capitalised, with loan repayments and new investment inflows continuing to exceed the value of share repurchases.
It also said the underlying portfolio remains fundamentally sound, with most portfolio companies performing in line with, or ahead of, expectations.
BCRED’s Class I shares have generated an annualised total return of about 9% since inception, according to Blackstone, representing a premium of approximately 290 basis points over leveraged loans.
However, Schorr noted that the fund’s year-to-date performance of 0.9% has lagged some peers, partly because of selected credit issues and write-downs involving portfolio companies including Medallia and Affordable Care.
