KKR & Co. limited the amount of shares it will repurchase from retail holders in its non-traded business development company KKR FS Income Trust, known as K-FIT, after it received an elevated level of withdrawal requests during the latest repurchase window, according to shareholder communications dated March 31.
During the repurchase period ending March 30, K-FIT received requests to repurchase shares equal to 6.3% of the fund's outstanding shares. KKR set a cap on repurchases at 5% of outstanding shares and will fulfill all requests on a pro-rata basis, satisfying roughly 80% of each investor's repurchase submission.
In a separate letter also dated March 31, the firm said its related but separately managed vehicle, KKR FS Income Trust Select, or K-FITS, faced repurchase requests totaling 3.7% of outstanding shares and will meet all of those requests in full. The two funds pursue similar investment strategies but are managed and distributed independently.
The shareholder letters note that both vehicles recorded gross inflows during the quarter that were larger than the total repurchase requests received. That detail means net flows for the period remained positive despite the spike in redemptions.
KKR's move to limit redemptions in K-FIT follows a broader pattern among alternative asset managers, which in recent weeks have placed restrictions on withdrawals in non-traded BDCs. These measures have been implemented as private credit markets have come under pressure and retail investors have increasingly sought to redeem shares.
Investor concerns outlined in the communications include questions about the underlying credit quality of private loans held by these vehicles and the potential for borrower exposure to disruption from advances in artificial intelligence. The letters do not provide additional detail beyond those cited concerns.
The repurchase requests and the firm's response reflect the operational mechanics of non-traded BDCs when faced with elevated retail demand for liquidity: managers can impose caps and apportion available repurchase capacity on a pro-rata basis, while separately managed vehicles may operate under different limits based on their own governance and distribution arrangements.
KKR's filings and letters dated March 31 are the source for the repurchase figures and the decisions communicated to shareholders.
Brief summary
- KKR capped K-FIT share repurchases at 5% after repurchase requests reached 6.3% of outstanding shares for the period ending March 30.
- K-FITS received repurchase requests equal to 3.7% of outstanding shares and will honor those requests in full.
- Both funds reported gross inflows during the quarter that exceeded total repurchase requests.
Contextual note - These actions align with a recent trend of redemption limits applied by alternative asset managers to non-traded BDCs as private credit pressures prompt higher retail withdrawal activity.