Blackstone's flagship private credit fund, BCRED, which manages $79 billion, limited investor withdrawals to 5% of shares in the second quarter. This decision came after redemption requests surged to 10%, up from 7.9% in the first quarter. While the 5% cap is the customary threshold for such vehicles, Blackstone had previously raised the cap in the first quarter and used employee capital to fulfill all $3.8 billion of those requests.
The increasing redemption requests indicate a trend of wealthy individuals retreating from private credit funds, an asset class that saw net outflows at the beginning of the year for the first time. Analysts from Evercore noted that the 10% request rate was "better than feared" compared to other funds, but raised concerns about the slowdown in new buyers, leading to net outflows of about 3% for BCRED in the recent period. This slowdown in gross sales is perceived as a larger, more prolonged issue for both BCRED and the wider industry.
Blackstone emphasized that the withdrawal limits are a "feature, not a bug," of these products, designed to exchange immediate liquidity for better long-term returns and to prevent forced asset sales. The fund stated that its repayment calendar is aligned with investment repayment cycles, preserving capital for attractive market opportunities. Despite the redemption cap, BCRED remains well-capitalized, with loan repayments and inflows outstripping share repurchases, and its Class I shares have delivered a 9.3% annualized total return since inception.
This move by Blackstone follows similar actions by other alternative asset managers, including Switzerland’s Partners Group, which also limited redemptions from a private equity fund. Blackstone's shares rose 8% after the announcement, with peers also seeing gains, reversing an earlier decline when news of other funds' redemption limits first emerged. The fund noted that repurchase requests slowed in the latter half of the May 1 to May 29 tender offer period.
