Morgan Stanley Restricts Fund Redemptions
Morgan Stanley has limited redemptions at its North Haven Private Income Fund (PIF) after investors sought to withdraw almost 11% of shares outstanding, according to a report by Reuters citing a regulatory filing, as detailed in Private Equity Wire. In a letter to investors, the firm returned about $169 million, roughly 45.8% of tender requests, for the quarter and stated it would fulfill tender requests equivalent to 5% of units outstanding as of December 31.
Reasons for the Redemption Limits
Morgan Stanley explained that limiting withdrawals would help avoid asset sales during periods of market dislocation and support long-term risk-adjusted returns, according to the same source. As of January 31, the fund was invested in 312 borrowers across 44 industries, with credit fundamentals described as broadly stable.
Context in the Private Credit Market
This move by Morgan Stanley occurs amid heightened scrutiny of the private credit market due to a series of credit concerns, uncertainty around an M&A recovery, potential credit deterioration, and declining asset yields, as noted in Private Equity Wire. Recent volatility has been linked to fears that artificial intelligence could weaken the earnings power of software companies, a major borrowing segment for private credit lenders, and pressure from issues around asset sales at Blue Owl that triggered a sell-off in shares of alternative asset managers with exposure to private credit.
Industry-Wide Trends
Other large asset managers have also imposed similar restrictions; for instance, BlackRock recently disclosed limits on redemptions from a flagship debt fund, while Blackstone reported a surge in withdrawal requests for its BCRED private credit vehicle during the first quarter, according to the report from Private Equity Wire.
