Blackstone Caps Withdrawals From Flagship Private-Credit Fund

Blackstone is restricting withdrawals from its flagship private-credit fund as a growing number of private-market managers brace for a surge in redemption requests.

The Manhattan-based private capital giant said on Thursday that it would limit investor withdrawals from the $79 billion Blackstone Private Credit Fund, known as BCRED, to 5 percent of outstanding shares after redemption requests reached 10 percent during the second quarter.

The decision marks a reversal from the first quarter, when Blackstone fulfilled all redemption requests, which totaled a then-record 7.9 percent of the fund, or about $3.8 billion.

In a letter meant to reassure investors, BCRED’s managers said redemption activity slowed in the second half of the offer period, while fundraising across Blackstone’s other private-wealth products has recently accelerated.

“We are entering an investment environment that we believe is especially compelling for corporate direct lending,” they said in the letter.

“Following a period of volatility early this year, markets are stabilizing, and deal activity is increasing at wider spreads compared to the prior quarter.”

Blackstone also sought to ease concerns about the health of the loans underlying the fund. BCRED said its borrowers’ earnings before interest, taxes, depreciation, and amortization rose 11 percent over the past 12 months, with software borrowers continuing to outperform the broader portfolio.

Exposure to software companies has become a growing concern for investors in private-credit markets. Some worry that advances in artificial intelligence could disrupt traditional software business models or intensify competition across the sector.

BCRED is among the latest private-market funds to cap second-quarter withdrawals, following a wave of unusually large redemption requests that hit the sector.

In April, Blue Owl told investors it was limiting withdrawals from two funds after receiving a record level of redemption requests in the first quarter. Investor concerns about artificial intelligence were cited as a key factor behind withdrawals from its technology-focused fund.

More recently, on Tuesday, Cliffwater said investors sought to redeem roughly 17 percent of shares in its $31 billion private-credit fund. The firm limited withdrawals to 5 percent of outstanding shares, or about $1.6 billion.

Cliffwater had previously honored redemption requests equal to 7 percent of the fund during an earlier surge in withdrawals.

A bigger shock took place on Wednesday, when Switzerland’s Partners Group curbed redemption requests in the $8.6 billion Global Value Sicav fund, one of its evergreen European private-equity funds.

Partners Group, with operations in both Europe and the United States, said it is limiting withdrawals to 5 percent in the second quarter after redemption requests rose to nearly 10 percent of the fund’s value.

That announcement triggered a sharp selloff in Partners Group shares, which fell as much as 18 percent on Wednesday.

Blackstone shares, meanwhile, rose 3.8 percent at the open on Thursday after falling about 4 percent during Wednesday’s broader selloff in alternative-asset managers.