Blackstone Private Credit Fund Caps Withdrawals as Redemption Requests Jump

Blackstone has capped withdrawals at its flagship private credit fund, the Blackstone Private Credit Fund (BCRED), as redemption requests rose in the second quarter, the world's largest alternative asset manager said on Thursday, June 4, following many peers. Investors sought to pull out 10% of shares in the second quarter, compared with 7.9% in the previous quarter, from the $79 billion fund. Blackstone limited withdrawals to 5%, the customary threshold for these vehicles, although most fund managers had capped redemptions at 5% in the first quarter. Blackstone said in a statement that the limits were deliberate and designed to replace immediate access to capital with the prospect of better long-term returns, adding that "BCRED's structure is a fundamental feature, with investors exchanging some liquidity at times for long-term outperformance."

The redemption requests reflect a continuing retreat by wealthy individuals from funds that give exposure to assets that rarely trade. According to Reuters, these investors pulled more money out of funds like BCRED at the beginning of this year than they put in, a first for the asset class. Blackstone said the company and some employees pooled money to help meet all redemption requests in the period.

Analysts said the requests were in line with or lower than expected. Evercore analysts said, "We think 10% is better than feared," comparing the figures with those seen at a $31.3 billion Cliffwater fund earlier in the week. However, Evercore flagged concerns about continued investor demand, noting that fewer new buyers came into the fund, producing net outflows of about 3%. "The big slowdown in gross sales this quarter is a larger, and more prolonged issue, in our view, for both BCRED and the industry," the analysts said.

BCRED said it remains well capitalized, with loan repayments combined with inflows outpacing share repurchases. Its Class I shares have delivered a 9.3% annualized total return since inception, which the firm said represents a 50% premium to leveraged loans. The tender offer ran from May 1 to May 29, and repurchase requests slowed in the latter half of that period. Blackstone also said it had seen an acceleration in gross fundraising across its other private wealth products, while other private asset firms, including Blue Owl, have reported greater appetite from wealthy investors for real estate as private credit fell out of favor. Blackstone's shares rose 8% on Thursday, with many peers following, after falling the previous day when Switzerland's Partners Group limited redemptions from a private equity fund. Partners Group also flagged more withdrawal requests on Thursday. Tender offer windows across major U.S. private credit funds are expected to expire throughout June.