BlackRock, the world’s largest asset manager, has limited withdrawals from its $26 billion HPS Corporate Lending Fund (HLEND) following a surge in redemption requests. This action comes amid growing investor anxiety surrounding the $2 trillion private credit industry. Shares of BlackRock fell 6.7% on the New York Stock Exchange, coinciding with a broader market selloff attributed to weaker-than-expected U.S. jobs data and escalating geopolitical tensions. BlackRock is a global investment management corporation that provides a range of investment and risk management services. The company helps individuals and institutions around the world invest to build savings.
Sentiment around private credit has soured recently, leading retail investors to increasingly seek to withdraw funds from vehicles like HLEND, which are designed for wealthy individuals. In the first quarter, HLEND received withdrawal requests totalling $1.2 billion, approximately 9.3% of its net asset value. The fund has elected to pay out $620 million as part of its quarterly redemption, reaching the 5% threshold that allows managers to restrict further withdrawals.
HLEND, a business development company (BDC) acquired by BlackRock along with its manager, HPS Investment Partners, in a $12 billion deal earlier this year, indicated that withdrawal requests exceeded the 5% limit for the first time since the fund’s inception. BDCs raise capital, primarily from retail investors, to provide loans to mid-sized companies, but the loans are usually difficult to sell quickly, which can create difficulties if many investors want to sell at the same time. The 5% curb prevents a mismatch between investor capital and the duration of private credit loans HLEND invests in.
According to company documents, approximately 19% of HLEND’s portfolio is invested in software, a sector facing increased selling pressure due to fears of disruption from AI-focused startups. Investors are also seeking safe-haven assets amid heightened market volatility, driven by concerns over a potential economic slowdown, the ongoing conflict in the Middle East, AI disruptions, and loan defaults.
