Blackstone (NYSE:BX) said redemption requests in its private credit fund BCRED have been "down materially" early in the third quarter, offering a more constructive signal for one of its closely watched private credit vehicles as the firm pointed to continued momentum across both private credit and private equity.
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"I would reaffirm what I said, which is it’s early in the quarter, but the redemptions in BCRED are down materially, which is positive," President and COO Jon Gray said on the company’s second-quarter earnings call.
The comment came after Blackstone said BCRED posted $1 billion in gross sales in the second quarter but saw $1.2 billion in net outflows as repurchase requests remained elevated and exceeded the vehicle’s 5% limit, with about 50% fulfilled. Gray said part of the improvement reflects calmer market sentiment after fears around private credit failed to play out.
Private Credit Platform Continues To Grow
"I think as much as anything, it’s the level of noise that has come down," Gray said. "A lot of people were calling for this massive calamity. And when the calamity did not occur, I think … that has calmed."
Gray said Blackstone is benefiting from a "massive secular shift" toward investment-grade private credit, particularly among insurers looking for higher returns without stepping down in credit quality.
At the platform level, Blackstone said its combined credit business has grown to nearly $550 billion, with $33 billion of inflows in the second quarter, or nearly half of total firm inflows. Insurance AUM reached $290 billion, up 15% year over year, while the firm highlighted a new partnership with Nippon Life that will deploy about $10 billion in private credit over the next several years.
Gray said insurers are increasingly embracing the strategy because "private investment grade credit can deliver to you higher returns" at "the same or higher ratings levels."
Blackstone also pointed to $84 billion of credit dry powder, which management framed as a built-in growth lever for future fee revenue as that capital is deployed.
Chief Financial Officer Michael Chae said the balance is "over double where it was at the beginning of 2024" and described it as a "built-in recoiled spring as it relates to expanding management fee growth."
AI Fuels Private Equity Performance
On the private equity side, Blackstone pointed to fundraising strength, AI-driven performance and a gradually improving exit backdrop.
The firm said its Asia private equity flagship closed at $13.1 billion, more than double the prior vintage, while its energy transition flagship reached nearly $6 billion in the quarter and is tracking toward $8.7 billion. Blackstone also said corporate private equity funds appreciated 3.7% in the second quarter and 14% over the past 12 months.
Chae said AI-related holdings made up nine of Blackstone’s 10 largest markups in the second quarter, underscoring how central the theme has become to firmwide performance.
Exit Market Remains Uneven
Even so, Blackstone described the private equity exit market as uneven. Gray said AI-linked businesses tied to data centers, power and electrification are seeing strong bids, while more traditional sectors are still transacting. But he cautioned that software, professional services and information-services businesses remain under more pressure.
"There’s just a sort of high quotient of uncertainty," Gray said. "And it’s making buyers more cautious."
That dynamic is shaping Blackstone’s near-term realizations outlook. The firm said it expects a sequential deceleration in third-quarter realizations, followed by a more robust fourth quarter and 2027, supported by a stronger IPO market, a larger public portfolio and an active energy-transition monetization pipeline.
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