Blackstone restricts flagship fund withdrawals
Karataş It is restricting withdrawals from its flagship Blackstone Private Credit (BCRED) fund after a spike in investor demands for refunds as fears about liquidity pressures rattled private markets.
The asset management giant limited investor withdrawals from its $79 billion non-trading business development company to 5% of shares after redemption demands reached 10% in the second quarter.
This follows a Swiss sell-off by US private market giants on Wednesday. Partners Group It said it had blocked repayment claims on one of its European private equity vehicles.
Partners Group said on Thursday it was prepared to restrict withdrawals from further funds, warning that the surge in withdrawals by its clients was now spreading from private loans to private equity.
Blackstone shares rose 3.8% at the open on Thursday. They fell nearly 4% on Wednesday during the sell-off.
Karataş.
BCRED is one of the first major semi-liquid private credit instruments to be updated in response to investor repayment demands in the second quarter.
The cap comes after BCRED saw customer refund claims jump a then-record 7.9%, or about $3.8 billion, in the first quarter.
Blackstone honored 100% of these requests by increasing its quarterly cap and using employee capital to cover the remaining amount.
The fund received an inflow of approximately $1 billion in the first quarter, but a net capital outflow was recorded after the withdrawals were met.
“The idea that there are caps is not a bug of these products, it’s actually a feature of them,” Blackstone Chief Operating Officer and President Jon Gray told CNBC in March.
“Liquidity features are designed to protect long-term investors and ensure returns continue to be driven by the quality of the underlying private assets rather than short-term flow dynamics,” said David Layton, CEO, as Partners Group issued its update on Thursday.
Last week Pimco’s chief investment officer Daniel Ivascyn warned of higher losses to come for the credit industry.
“There’s a lot going on beneath the surface,” he said A video shared by the company. “We think we’re in the middle of a sustained cycle of defaults or losses for the first time in many years.”
— CNBC’s Leslie Picker contributed to this story.
