BlackRock has restricted withdrawals from its flagship fund for the first time. Shares plummeted
This is another blow to the private lending market
HPS Corporate Lending Fund said it will redeem up to 5% of its shares this quarter, while investors filed to withdraw 9.3% / Photo: rblfmr / Shutterstock.com
Shares of BlackRock, the world's largest investment company, collapsed 7.2% on Friday after it restricted withdrawals from a key private credit fund for the first time. For BlackRock securities, it marked the worst day since April 4, CNBC writes. And for the $1.8 trillion private credit market, it was a new warning sign.
Quotes from alternative asset managers including KKR & Co. and Ares Management also fell sharply.
HPS Corporate Lending Fund, a business development company that is not publicly traded, said Friday it will repurchase up to 5% of its shares this quarter, the minimum amount it has committed to repurchase each quarter, The Wall Street Journal reported. The decision drew market attention because shareholders had requested the withdrawal of 9.3% of the fund's securities, BlackRock said in a letter to investors Friday. According to the WSJ, this is the first time in the fund's four-year history that redemption requests have exceeded 5%. Retail investors are increasingly asking for their money back amid heightened concerns about the private credit market, Reuters explains .
Bloomberg calculates that the total value of the shares requested by investors would be about $1.2 billion, but they will get back about $620 million - the amount the fund had at the end of the year.
"This should be a warning signal to the industry and regulators about the risks associated with illiquid funds for retail investors," Morningstar senior equity analyst Greggory Warren told Reuters.
This week, a growing flood of withdrawal requests forced Blackstone's $82 billion rival fund to raise its normal share buyback limit from 5% to 7%. At the same time, the company itself and its employees put up $400 million to satisfy all investor requests. In January, asset manager Blue Owl also redeemed 15.4% stakes in one of its funds, Reuters writes. And on Feb. 18, Blue Owl permanently restricted quarterly investor withdrawals from its private credit fund focused on retail market participants, Blue Owl Capital Corp II. That sent shares of alternative asset managers tumbling and heightened concerns about the health of the private-lending sector, which has grown rapidly in recent years.
This article was AI-translated and verified by a human editor
