BlackRock Restricts Withdrawals from $26 Billion Private Credit Fund

Private Credit Industry Braces for Redemptions Amid Growing Anxiety

BlackRock Inc. has capped withdrawals from its $26 billion HPS Corporate Lending Fund (HLEND), a non-traded business development company, after client requests for redemptions surged to 9.3% of shares. Management decided to limit the repurchase to 5% of shares, which would have resulted in approximately $1.2 billion in withdrawals if the original request had been fulfilled.

The decision is in line with the fund's existing management of liquidity and is a "foundational" feature of the HLEND. The company stated that without this measure, there would be a structural mismatch between investor capital and the expected duration of the private credit loans in which HLEND invests.

Private credit funds are bracing for a wave of redemption requests as angst grows around the industry's lending practices and exposure to businesses that could be upended by artificial intelligence. HPS Investment Partners, one of the largest alternative credit managers, was purchased by BlackRock last year.

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Other private credit fund managers are also facing withdrawal requests. Blackstone Inc.'s flagship private credit fund recently fulfilled requests to tender a record 7.9% of shares, partly by having the firm and employees step in to offset some of the withdrawals. Blue Owl Capital also let investors in one of its technology-focused funds cash in approximately $527 million (15% of the fund's net assets) in January.

The $1.8 trillion private credit industry is facing growing anxiety among retail investors, with $1.2 billion in potential withdrawals from the HLEND fund serving as a notable example.