At a glance
- Gross sales at the nontraded BDC fell to nearly $750 million from $1 billion in the prior quarter.
- The 75% follows from the proration mechanic itself: filling about half of a request in each of two consecutive quarters returns 50% at once and half of the remaining 50% three months later, leaving a quarter still outstanding.
- On Blackstone's July 23 call, Gray said redemption requests were down materially early in the third quarter.
Blackstone Private Credit Fund took $1.4 billion of net outflows in the third quarter, up from $1.2 billion in the second. Repurchase requests equaled 10% of net asset value, twice the fund's 5% quarterly limit, and the fund filled roughly half of them, Blackstone Inc. executives said on the firm's Oct. 22 earnings call.
Gross sales at the nontraded BDC fell to nearly $750 million from $1 billion in the prior quarter. President and chief operating officer Jon Gray attributed the size of the queue largely to carryover from the second quarter, and he said investors who sought redemptions in both prorated quarters received 75% of their capital back in about 90 days, calling it "another illustration of the semi-liquid structure working as designed."
Two quarters, one queue
The 75% follows from the proration mechanic itself: filling about half of a request in each of two consecutive quarters returns 50% at once and half of the remaining 50% three months later, leaving a quarter still outstanding. The queue does not reset between quarters; it carries. AltsWire reported Sept. 3 that third-quarter requests totaled an estimated $4.3 billion, roughly 10% of shares outstanding, and that it was the third straight quarter in which demand topped the fund's cap.
On Blackstone's July 23 call, Gray said redemption requests were down materially early in the third quarter. The firm has said BCRED's requests remained elevated largely because of heightened press and market attention around private credit and concerns about decelerating performance, and that net flows were likely to remain under pressure. Executives gave no fourth-quarter BCRED request outlook on Thursday's call.
BCRED's NAV per share fell to $23.51 on Sept. 30 from $23.65 at June 30, its fifth consecutive quarterly decline; the fourth was the subject of this publication's August coverage. Aggregate NAV dropped to approximately $41.1 billion from $42.8 billion. The investment portfolio was valued at approximately $75.6 billion against approximately $34.8 billion of debt outstanding. Shares accepted in the third-quarter repurchase were priced at the Sept. 30 NAV, and the fund has said it will disclose the final dollar value of repurchases in November.
Nearly $750 million of gross sales and $1.4 billion of net outflows imply about $2.15 billion of gross repurchase payouts, a figure the November disclosure should clarify. Firmwide, Blackstone's private wealth business grew AUM 15% year over year to a record $330 billion, with nearly $9 billion in sales during the quarter, compared with $324 billion and $8.6 billion in the second. Gray said fundraising for the firm's perpetual strategies rose materially from the second quarter, and sibling vehicle BREIT posted its best regular-way net flows in four years.
Other nontraded vehicles met their queues in full this quarter: as this publication reported Oct. 19, the Ares and Invesco nontraded REITs paid all third-quarter redemption requests. For BCRED, the 5% cap has now bound for three straight quarters; the remaining question is whether the backlog clears or keeps rolling forward half a queue at a time.
Half a queue at a time: a BCRED redemption, paid out over two quarters
Share of a request submitted and prorated in two consecutive quarters
Show as table
| Label | Value (%) |
|---|---|
| Paid in Q3 | 50% |
| Paid in Q4 | 25% |
| Still queued | 25% |
The queue does not reset between quarters; it carries.
Reported by the Liquidity desk. Published . Corrections