NEW YORK, March 6 (Reuters Breakingviews) - Rising disquiet in private credit is uncomfortable for a lot of Wall Street titans, but especially for Larry Fink. The BlackRock (BLK.N), opens new tab boss moved aggressively to transform his firm, the kingpin of public-markets investing for ​the masses, into a private-markets rival to the likes of Blackstone (BX.N), opens new tab or Apollo Global Management (APO.N), opens new tab. The timing now looks awkward, as worries ‌about overheated lending mount and a key retail fund caps investor withdrawals. Fink’s legacy project, and his company’s strengths, will be tested.

As part of a $28 billion string of deals to move into private markets, BlackRock agreed to acquire non-bank lender HPS Investment Partners in 2024. Included in that $12 billion acquisition was HPS Corporate Lending Partners, or HLEND, a nontraded business development ​company (BDC). Such funds target affluent individual investors, allowing them to withdraw their cash up to a set cap, typically of 5% of shares per ​quarter. According to a shareholder letter, opens new tab, HLEND received requests totaling 9.3%, but will only offer redemptions up to its limit, ⁠as it was designed to do.

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This is far from the first hiccup in private credit. A Blue Owl (OWL.N), opens new tab fund barred regular withdrawals, instead selling assets to raise ​cash and return a huge chunk at once. To satisfy elevated redemptions at BCRED, the largest nontraded BDC around, Blackstone employees and the firm itself put in ​a combined $400 million to ensure all requests were covered.

HLEND, though, is the first BDC of its kind to actually prorate redemptions, though others are expected to end up following suit, according to Kevin Gannon of investment bank RA Stanger. Turning theoretical fine-print restrictions into reality may well annoy, and possibly frighten, customers.

When BlackRock bought HPS, private credit was running red-hot. ​Assets under management in direct lending funds alone had climbed to $889 billion, according to Preqin data. Apollo and its ilk saw an addressable market in ​the tens of trillions of dollars by expanding into IOUs secured by specific assets. These strategies are increasingly pitched as a fit for the kind of mom-and-pop savers that made ‌BlackRock a ⁠colossus, with $14 trillion of assets under management.

The company got there in part by inking perhaps the most successful deal in modern asset management history, snapping up Barclays’ BGI in 2009 for $13.5 billion and riding then-explosive growth in exchange traded funds. If anyone has a track record of cracking new markets and reaching the retail masses through M&A, it’s Larry Fink.

His public-markets business is still immensely successful, and HLEND is only one small piece of a larger plan. Still, rivals ​like Blackstone are increasingly trying to eat ​BlackRock’s lunch by selling retail products. ⁠Meanwhile, from Apollo boss Marc Rowan to JPMorgan CEO Jamie Dimon, warnings of a coming private credit, opens new tab shakeout are rising. As HLEND’s investor letter put it, disruptive periods breed new opportunities. BlackRock’s challenge is to prove it can capitalize on ​them.

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Context News

• HPS Corporate Lending Fund, a nontraded business development company, said in a letter to ​investors that it ⁠received requests to redeem 9.3% of shares outstanding in the first quarter of 2026. The fund, which runs a continuous tender offer to repurchase up to 5% of shares each quarter, will only serve requests up to that cap, which represents approximately $620 million.
• The vehicle, also referred to as HLEND, was acquired by BlackRock as part of ⁠its $12 billion ​purchase of manager HPS Investment Partners, announced in 2024.
• HLEND is the first nontraded BDC to report ​proration of redemption requests above its quarterly cap, according to investment bank RA Stanger.
• Separately, BlackRock in 2018 acquired Tannenbaum Capital Partners, which managed listed business development company TCP Capital. Now branded as ​BlackRock TCP Capital, its shares are down over 28% year-to-date.

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Editing by Robert Cyran; Production by Maya Nandhini, Pranav Kiran

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Jonathan Guilford

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Jonathan Guilford is Breakingviews U.S. Editor, based in New York. He has covered financial news across Europe and the United States for 10 years. He joined Reuters Breakingviews in 2021 from Dealreporter, where he led risk arb coverage strategy from New York while covering the technology, media and telecommunications space. He previously covered the European healthcare services market. He studied English and Italian at Royal Holloway, University of London.

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