BlackRock's stock price declines after private credit funds previously restricted redemptions

Investing.com – BlackRock (NYSE:BLK) stock fell 5% on Friday after Bloomberg reported that the asset management firm has set a redemption limit on its $26 billion HPS corporate loan fund, heightening market concerns about the private credit industry.

The news also put pressure on other private equity firms, with Blue Owl Capital down 6%, KKR down 6%, Carlyle Group down 6%, Apollo Global Management down 5%, Ares Management down 6%, and TPG Inc. down 5%.

According to reports, shareholders are requesting to redeem 9.3% of their shares in the HPS corporate loan fund, which is one of the largest non-traded commercial real estate development companies in the industry. Management has limited the buyback to 5%, which Bloomberg estimates to be about $1.2 billion.

BlackRock stated that this move complies with the fund’s existing liquidity management policies and is a fundamental feature. The company said that without such restrictions, there would be a structural mismatch between investor capital and the expected duration of private credit loans.

The non-traded commercial real estate development company, named HLEND, announced last month that it would buy back up to 5% of its shares, a common practice for such companies. The fund faced approximately 4.1% redemptions in the previous period.

As concerns about the industry’s lending practices grow, private credit funds are facing increasing redemption requests.

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