Blackstone fund hit by redemptions as investors get jittery around private credit

• Blackstone's retail credit fund saw $1.7 billion in investor withdrawals.
• The news comes amid growing jitters over private credit, which has hurt competitors like Blue Owl.
• Blackstone fulfilled redemption requests for 7.9% of BCRED shares in the first quarter.

Blackstone's retail-oriented private credit fund saw $1.7 billion in investors' cash leave in the first quarter amid growing anxieties over non-bank lending.

Investors in the $82 billion BCRED tendered 7.9% of the fund's shares for repurchase in the first quarter, according to a filing with the Securities and Exchange Commission. That exceeded the fund's usual 5% quarterly repurchase cap, which the fund's board approved to fulfill all redemption requests.

Blackstone's stock price fell 7% as of 10:52 am following the filing as the broader stock market traded down on Iran war fears.

The news comes amid widespread jitters around the private credit asset class and its move into the retail market, which has led to redemptions at Blackstone competitor Blue Owl Capital. Investors are increasingly focused on lenders' vulnerability to AI-driven disruption in the software industry.

Following a few high-profile credit crackups late last year, top financial leaders have been publicly arguing over whether a deterioration in private corporate loans could lead to a systemic market event.

The largest credit firms have been continuing their push into retail markets, selling products like BCRED through wealth advisors while building out 401(k) retirement platform offerings.

At the end of last month, Blue Owl said it would permanently halt regular quarterly withdrawals on one of its private credit retail funds and instead wind the fund down and return money that way. As part of the process, the fund sold some loans and said it would repurchase about 30% of its outstanding shares. This comes following a failed attempt to merge this fund with one of its publicly traded credit funds.

Blue Owl, which is a major financier of the software industry, is now facing concerns that its tech bets in credit are at risk from AI. Simultaneously, the firm's data center equity investments recently hit a roadbump, with the firm unable to secure financing for a $4 billion data center in Pennsylvania.

Jim Cramer, the CNBC stock analyst, recently noted that for Blue Owl, "things just seem to be getting worse here." He posted on X last night that Blackstone showed "great honor in their redemption policy."

The Blackstone filing said the fund saw nearly $2 billion in fresh inflows in the quarter. It said the firm and its employees invested another $400 million into the fund in order to fund an additional .9% of repurchases, which otherwise would have been capped at 7% because of the "tender offer structure."

The withdrawals don't reflect "constraints on BCRED's liquidity," according to the filing, which notes that the fund had more than $8 billion in available liquidity at the end of last year.

Also on Monday, Blackstone's BREIT real estate fund, once the target of widespread redemptions from 2022 onwards, told Bloomberg that it had net inflows for the first time since 2022 in the first quarter. A firm spokesperson confirmed this to Business Insider.