Blackstone Private Credit Fund board urges rejection of 12.5% discount tender

Blackstone Private Credit Fund's board is urging shareholders to reject an unsolicited offer for their Class I shares at 12.5% below net asset value, and it made its case in the document those investors read most closely: a filing that measures the bid against the fund's NAV, its repurchase program and its recent performance, according to Blue Vault Partners.

The board's answer rests on the benchmarks it controls and leaves the decision with each shareholder. Taking the bid locks in a 12.5% haircut off NAV today; waiting keeps the shares at their stated value as the exit queue stretches ahead. For an investor who does not need cash soon, the board's arithmetic is easy to accept; for one who does, the offer is a price on time. A board can urge rejection; it cannot decide for the holder. The offer runs to the Class I shares, and each investor chooses whether to sell, which is why the filing reads as an argument rather than a veto and why its real audience is the shareholder sitting on a redemption request the next window may only partly fill.

Stanger's third-quarter tally across 19 non-traded NAV BDCs—funds that publish a stated value daily but cap how much they will redeem—shows sponsors paid $5.6 billion to exiting investors and left $8.2 billion of redemption requests unfilled, meeting about 40% of $13.8 billion in requests across a group that now covers 98% of the market. Demand to leave ran at more than double the dollars the windows returned, and that shortfall is what a secondary buyer is pricing.

A NAV BDC pairs a stated value with a limited promise of liquidity, and the quarterly cap is what keeps a rush for the exit from forcing asset sales at the wrong moment—the discipline investors accept when they buy the wrapper. The daily price and the quarterly window are meant to work as a pair, giving a private-credit portfolio some of the feel of a liquid holding. In a quarter when requests reach $13.8 billion against a $5.6 billion payout, the two come apart: the price still moves daily, and the exit does not.

When requests exceed a fund's quarterly cap, it fills pro rata—every shareholder who asked gets the same fraction, and the balance rolls into the next window—so in a line that long, the fraction gets small. OTIC carried a repurchase queue at 39% and, under a 5% cap with pro rata fills, is paying about 13% of what shareholders are seeking. Blue Owl Credit Income expects to fill roughly 30% of third-quarter requests, after shareholders asked to redeem 16.8% of shares outstanding, more than three times its 5% cap and down from 18.8% in the second quarter; together the two Blue Owl funds drew an estimated $4.2 billion in third-quarter requests.

Ares Strategic Income Fund reported third-quarter repurchase requests equal to 11.6% of the fund, and its published summary omits the payout split and any new portfolio-quality figures, leaving the fill rate shareholders will receive unstated in the materials it released. Without that split, a holder cannot tell how much of the 11.6% the fund will honor.

The Blackstone filing leans on three benchmarks: NAV is the value the board defends and the level the offer undercuts; the repurchase program is the alternative exit, its weight turning on how much of the queue it clears; recent performance is the forward case, in which a holder who stays is betting the fund's returns outrun the discount over the wait. Read together, they frame the choice as stated value against a haircut, with the length of the line as the tiebreaker.

The machinery behind the discounted bid is simple: a shareholder who cannot clear the official gate is offered a second door, and the discount is the toll. The board argues the toll is too steep against NAV; the buyer's offer implies that an immediate, certain fill is worth a price NAV does not carry. Both can hold at once, and which one governs depends on how long the official queue takes to drain.