The stock ended at $955 on the New York Stock Exchange, weighed down by a broader market selloff following weaker-than-expected U.S. jobs data and heightened tensions over the ongoing U.S.-Israeli war with Iran.
At the center of the growth is BlackRock’s $26 billion HPS Corporate Lending Fund (HLEND), which has seen a surge in redemption requests from investors. The fund received $1.2 billion worth of withdrawal requests in the first quarter, about 9.3% of its net asset value. BlackRock said it would pay $620 million as part of quarterly redemptions, reaching the 5% threshold that typically allows managers of such funds to restrict further withdrawals.
HLEND, a business development company that BlackRock acquired with its manager HPS Investment Partners in a push for $12 billion in private credit in 2024, said redemption requests breached the 5% limit for the first time since the fund’s inception.
Business development companies usually raise money mostly from retail investors and use those funds to make loans to mid-sized companies. These loans are often difficult to sell quickly. If a large number of investors want to withdraw money at the same time, it can create liquidity challenges for the fund.
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BlackRock said the redemption cap helps prevent a structural mismatch between an investor’s capital and the duration of the private credit loans in which the fund invests. By limiting withdrawals, fund managers can avoid selling assets at unfavorable prices, which could hurt returns for remaining investors.
Recent credit events have also added to the anxiety. Bankruptcies last year involved a US auto parts supplier and a subprime auto lender. Most recently, a UK mortgage lender collapsed last week, raising fresh questions about lending standards in the sector.
The pressure is not limited to Blackrock. Earlier this week, rival Blackstone raised the usual 5% redemption cap on the $82 billion fund to 7%. The firm and its employees also invested $400 million to ensure that all withdrawal requests could be met. Blue Owl, another player in the sector, bought back 15.4% of one of its funds in January, replacing client redemptions with promised payouts.
Despite the increase in withdrawals, HLEND continued to attract some new capital. Subscriptions totaled $840 million in the first quarter, although this was $1.2 billion less than investors had originally sought to redeem.
According to reports, around 19% of HLEND’s portfolio is invested in software companies. The sector has recently faced a heavy sell-off as investors worry about disruption from AI-first start-ups. The fund says its loans are made primarily to mature private companies with stable cash flows and are designed to make the first payment if the borrower becomes insolvent. HLEND also distributes dividends to investors on a monthly basis.
The development comes as investors increasingly move money into safer assets amid rising market volatility, concerns about a possible economic slowdown and uncertainty associated with the ongoing conflict in the Middle East.
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