Blackstone Private Credit Fund board urges shareholders to reject 12.5% discount tender

Blackstone Private Credit Fund's board is urging shareholders to reject an unsolicited offer for a limited quantity of Class I shares at 12.5% below net asset value, according to Blue Vault Partners. The filing, as Blue Vault describes it, measures the bid against the fund's NAV, its repurchase program and recent performance. The account names neither the buyer, the size of the bid nor its expiration date.

The arithmetic behind a rejection is easy to sketch. A bid fixed below NAV hands the gap to the buyer, while the repurchase program keeps the assets in place and answers exit requests through a queue that has run shorter than demand in every recent quarter. Whether 87.5 cents on the dollar is cheap depends on what that queue eventually pays, and when, because the 5% quarterly cap is a constant and the queue—not the sponsor—decides who gets paid in any quarter.

Across 19 reporting nontraded NAV BDCs, Stanger's tally for the third quarter shows sponsors paid $5.6 billion to exiting investors and left $8.2 billion of requests unmet—about 40% of the $13.8 billion shareholders asked for. Blue Owl Credit Income made the same point with a single fund: shareholders requested 16.8% of shares outstanding, more than three times the 5% quarterly cap, and the fund will fill about 30% of them. An investor who wants out in size is therefore looking at a wait measured in quarters, which is the condition under which a discount stops reading as a haircut and starts reading as a price.

September already produced a comparable number from the other side of the trade, when Cox Capital's $40 million tender on two of the largest nontraded BDCs carried discounts of 12.5% and 17.5% to NAV. The bid was never going to clear a queue; its value was the pricing, which gave the wealth channel a market level for illiquidity. Now the board is recommending shareholders refuse the lower of those two levels, and Blue Vault does not say whether the bidder is the same one.

The board may well be right: the filing's comparison against performance and NAV suggests the fund expects to keep paying holders through its own program rather than concede the gap to a secondary buyer. The test will come in the fourth quarter's proration percentages, and in whether other boards facing similar bids follow this recommendation.