KKR & Co. ’s (NYSE:KKR) non-traded business development company, KKR FS Income Trust Select, is allowing investors to withdraw slightly more than its initial quarterly redemption limit after requests narrowly exceeded the threshold.
The private credit fund, which is available to retail investors, received repurchase requests covering 5.06% of outstanding shares for the period ending Sept. 29, according to a filing seen by Bloomberg.
K-FITS, which had net assets of approximately $996 million, plans to honor all of the requests rather than prorating redemptions. The decision was based on a relatively small amount by which requests surpassed the limit, as well as the fund’s available liquidity.
KKR’s other fund, KKR FS Income Trust (K-FIT), also saw elevated redemptions, equal to 1.53% of outstanding shares. The firm plans to meet the redemptions in full.
K-FIT and K-FITS follow similar investment strategies but operate under separate management and distribution arrangements. For K-FIT, new investments have exceeded repurchase activity through the first three quarters of the year.
K-FIT has approximately $1.7 billion in net assets and has posted an annualized net return of 12.67% since its March 2023 inception. K-FITS, launched in February 2024, has delivered an annualized net return of 8.64% over the same period.
Private Credit Funds Cap Redemptions
Private credit funds have been capping redemptions at 5% in recent months amid rising concerns about asset quality and valuations, particularly in software lending.
Blue Owl Capital (NYSE:OWL) has continued to see a large influx of redemptions across its private credit funds. Investors asked for 39% of shares from the firm’s Blue Owl Technology Income Corp. (OTIC), its largest fund focused on technology lending. Blue Owl Credit Income Corp. saw redemption requests ease slightly. Investors asked to redeem 16.8% of shares, down from 18.8% in the prior period.
Cliffwater LLC’s flagship private credit fund capped redemptions at 5% in Q3 after investors asked to redeem approximately 16% of shares. Cliffwater Corporate Lending Fund told shareholders in a letter that it would fulfill approximately one-third of redemption requests.
Meanwhile, KKR & Co.’s (NYSE:KKR) private credit fund for wealthy clients outside the U.S. has seen redemption requests ease. KKR-Income Trust I, a non-traded private credit fund serving investors in Europe, the Middle East, Africa, and the Asia-Pacific region, received withdrawal requests equal to about 2.5% of its net asset value in Q3.
Blackstone (NYSE:BX) President and COO Jon Gray says investor confidence in private credit will recover and inflows will return despite redemption pressure at the firm’s $77 billion private credit fund and broader concerns about valuations and underwriting.
Last month, Blackstone kept its flagship private credit vehicles’ quarterly withdrawal limit unchanged at 5% after investors again asked to redeem more shares than the fund was willing to pay back.
Investors sought to tender roughly 10% of BCRED’s shares in the third quarter, similar to the prior quarter, Reuters reported, citing Blackstone’s regulatory filing.
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