Blackstone’s flagship private credit vehicle, the Blackstone Private Credit Fund (BCRED), is maintaining its 5% quarterly redemption limit after investors sought to withdraw around 10% of the fund during Q3, according to Private Equity Wire, citing a report by Reuters. BCRED has approximately $77.2bn in assets and 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.
Q3 repurchase requests and the 5% quarterly limit
The level of redemption requests in Q3 was broadly in line with the previous quarter, when investors also sought to withdraw roughly 10% of their holdings, according to Private Equity Wire. The article describes the continued demand for liquidity as highlighting continued liquidity pressure across the non-traded private credit market.
BCRED recorded net outflows of approximately 3% during the quarter. The article reports that new investor demand generated close to $750m of inflows.
Backlog details from the prior quarter
The latest figures also underline the extent of the redemption backlog facing BCRED, according to Private Equity Wire. The fund received around $4.5bn of repurchase requests in the second quarter but was able to fulfil only about half of them. The article states this left 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.
Blackstone’s comments on capitalisation and portfolio
Blackstone maintained that BCRED remains well capitalised, with loan repayments and new investment inflows continuing to exceed the value of share repurchases. Blackstone also said the underlying portfolio remains fundamentally sound, with most portfolio companies performing in line with, or ahead of, expectations.
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 the article describes as an important segment of the direct lending market.
Reported returns and performance points
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. The article also reports that BCRED’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.
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.
