Private credit funds marketed to high-net-worth investors are confronting renewed withdrawals in the second quarter, according to early filings and shareholder communications. Concerns cited by investors include concentrated software exposure, valuation levels and a lack of transparency in the asset class, and managers have moved to limit repurchases as redemption windows close.
Redemption windows at a number of important U.S. non-traded private credit funds began to close last Friday. Market participants and analysts are monitoring withdrawal requests closely for signs that the first-quarter pressures are continuing into the second quarter.
Across eight large private credit vehicles reviewed, first-quarter redemptions amounted to roughly $7.1 billion, the highest total in the dataset. Weaker fundraising and looming June redemption deadlines are creating another test of investor demand for the sector.
Recent fund actions this week
Blackstone Private Credit Fund - The fund imposed a cap on withdrawals after investors sought to redeem 10% of outstanding shares in its second-quarter tender offer, double the vehicles stated 5% quarterly repurchase limit. The manager reported capital inflows equal to about 2% of net asset value (NAV), producing a net outflow of approximately 3% of NAV. The statement noted that repayments and inflows exceeded share repurchases.
Blackstones fund had met all withdrawal requests in the first quarter, the manager said, and added that second-quarter repurchase demand eased later in the offer period. The firm also indicated that repurchase demand was lower for onshore investors compared with the prior quarter.
Cliffwater Corporate Lending Fund - In a shareholder letter on Tuesday, Cliffwater disclosed that investors in its $31.3 billion private credit fund submitted requests to redeem 17% of shares in the second quarter, while redemptions were capped at 5% under the offer. That represented an increase from the first quarter, when investors sought to redeem 14% of shares and redemptions were capped at 7%.
The Cliffwater vehicle is structured as an interval fund, which requires periodic repurchase offers. The fund holds about 4,000 assets, a mix that includes direct loans to corporate borrowers and stakes in funds managed by other investment firms.
Implications - Managers are balancing repayments and inflows against repurchase demands, and several large funds have set caps when tender requests exceeded routine quarterly limits. The scale of first-quarter outflows and the size of second-quarter requests will be watched as indicators of investor appetite for non-traded private credit strategies.