Investors withdraw capital from two large funds of the US major investor.
(Photo: Reuters)
Frankfurt Prominent US investor Blackstone is struggling with outflows from another of its funds. BCRED, a Blackstone-run private debt fund that has $50 billion under management, according to Bloomberg, has reached its quarterly client recovery limit, according to a regulatory notice.
By the end of the fourth fiscal quarter, which ended November 30, customers had submitted redemption requests for five percent of the total fund shares. The limit set in the fund conditions has thus been reached.
Just had to last week Blackstone the repayments from his $69 billion real estate fund for similar reasons Blackstone Restrict Real Estate Income Trust (“Broad”). Investors in the real estate fund had previously tried to withdraw too much money from the fund.
In the case of BCRED, Blackstone stressed that all customer take-back requests would be met. The fund has $8 billion in cash and has had net inflows in the current quarter.
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The Blackstone fund’s business model is to lend – primarily to mid-sized companies and for acquisition financing. Such private credit funds have become an integral part of corporate financing in recent years.
>> Read here: Blackstone’s real estate fund stops repayments
In Europe, the majority of transactions are takeover financing. The so-called debt funds are gaining ground here, because the banks have recently shown themselves to be rather cautious and large syndications have come about less frequently due to the uncertain economic outlook and growing regulatory requirements. However, the credit funds are also becoming increasingly active in classic corporate financing, for example in investments.
Supervisors are sensitized
As a rule, the loans from the credit funds are somewhat more expensive than bank loans, but the lenders are flexible when it comes to adjusting the conditions. The financial service provider Preqin assumes that private credit funds will continue to grow and that the funds collected will more than double to $2.69 trillion by 2026.
Regulators are currently watching all signs of tension in the financial markets very closely, also because they fear that the interest rate hike initiated by the major central banks could cause abrupt movements in the markets. The experts at the Bank for International Settlements also see risks in the so-called shadow banks. All players in the financial markets, who do similar business to banks but are not as strictly regulated, fall into this category.
More: The fear of a new financial crisis is growing