Jon Gray, president and chief operating officer of Blackstone, speaks during the Axios BFD event in New York City, U.S., October 12, 2023. REUTERS/Brendan McDermid
Brendan Mcdermid | Reuters
black stone Chairman Jon Gray on Tuesday defended the quality of loans within the company’s flagship private credit fund after investors withdrew nearly 8% of it in the latest quarter.
The alternative asset management giant said in a filing late Monday that it allowed investors to withdraw 7.9% from BCRED, which it considers the world’s largest private credit fund, with around $82 billion invested. Blackstone did this in part by allowing the company’s own investors to invest $150 million in the fund.
The move sparked a sell-off in shares of Blackstone, which fell as much as about 8.5% in morning trading Tuesday, as well as other private lenders.
“When you think about credit quality, the 400-plus borrowers here had 10% growth in EBITDA last year,” Gray told CNBC’s David Faber, using a term that refers to a company’s financial performance. “So when we look at this, we feel pretty good.”
Rather than calming markets, recent moves by alternative asset managers to allow investors to withdraw funds from their funds have only increased nervousness around private credit and lending to the software industry. Last month, the storm intensified when Blue Owl said it had found buyers for $1.4 billion of its loans, in part to help retire 30% of a troubled credit pool.
Now, with much larger asset manager Blackstone dragged down by it, concerns around private credit appear to be widening.
“We’ve had a lot of noise,” Gray told CNBC. “As you know better than anyone in the press, this has become a story.”
Concerns first arose last fall with the collapse of Tricolor and First Brands, companies that also received financing from banks, the Blackstone executive said.
“There’s a constant spinning cycle, and when that happens, it’s no surprise that investors get nervous,” Gray said. “Financial advisors can say, ‘Hey, I want to redeem.'”
A Blackstone spokesperson said the company and its employees’ investment in BCRED was to “meet 100% of requests for the quarter with certainty and on time. This underscores our conviction in BCRED and our alignment with its investors.”
The fund has earned an annualized return of 9.8% since its inception for Class I shares, the spokesperson said.
