What is the true situation of BlackRock Private Equity Fund's restricted redemption and Blackstone Private Equity Fund's record breaking redemption application? On Friday, BlackRock, the world's largest asset management company, announced restrictions on investor redemptions of its $26 billion HPS Corporate Loan Fund (HLEND), following a record 7.9% (fund shares) redemption application for Blackstone's private credit fund, which has once again raised concerns in the market about private credit. After checking some information, I found that it is slightly different from what many people panic about. Let's talk about my personal opinion: 1. Let's talk about the situation of BlackRock HLEND first HLEND (HPS Corporate Lending Fund) is a non traded business development company (BDC) under BlackRock, with a scale of approximately $26 billion, mainly investing in senior secured loans (private credit/direct lending) for mid to high market enterprises. It is the flagship retail private equity credit product managed by BlackRock after its acquisition of HPS in 2024, targeting high net worth/qualified investors, accepting new subscriptions on a monthly basis (based on net asset value) and monthly dividends, but providing liquidity through quarterly repurchase offers. This redemption coincides with the Q1 buyback offer window of 26 years (usually effective around the end of March): 1) Fund investors have applied to redeem 9.3% of the outstanding shares, valued at approximately 1.2 billion US dollars; This is the first time since the establishment of the fund that it has exceeded its limit (the previous quarter of 25 years was only about 4.1%, and the redemption has been fully satisfied). 2) The board of directors of the fund has decided to approve only a 5% repurchase (approximately $620 million) that will not be automatically carried forward. Investors will need to reapply in the next quarter (an additional 2% early repurchase fee may be deducted if the shareholding is less than 1 year). 3) HLENd Fund received approximately $840 million in new subscriptions during the same period, with ample liquidity (cash/available funds exceeding $4.4 billion), and will continue to invest as planned. It should be noted that HLEND's initial prospectus clearly stipulated that fund redemptions would be executed quarterly, with a standard redemption limit of 5% (5% of the total outstanding shares), which was also registered with the SEC. So BlackRock's HLEND redemption restriction does not mean that investors are not allowed to redeem, but rather restricts the portion of investor redemption applications that exceed the single redemption limit specified in the prospectus. In the first quarter, HLEND also received $840 million in new subscription funds. BlackRock classified this move as a "fundamental" arrangement for fund liquidity management in its statement, stating that without restrictions, there would be a "structural mismatch" between investor capital and the duration of private credit loans. Actually, it can be understood that almost all publicly listed investment funds (especially those investing in private equity, credit and other products) have a limit on each investor redemption, and it is impossible to say that investors can redeem all at once without any restrictions, which is an obvious deadline force waiting. Because the investment targets and exits of funds also require a time cycle. 2. Let's take a look at the situation of Blackstone again Blackstone's flagship private credit fund BCRED (with a size of approximately $82 billion) has recently faced redemption pressure similar to HLEND. 1) Investors applied to redeem 7.9% of their shares in the first quarter of 2021, amounting to approximately $3.8 billion. This also exceeds the quarterly repurchase limit of 5% of the BCRED fund standard fund terms (with the same design as HLEND). 2) Blackstone's response The BCRED Fund Board of Directors has raised the repurchase limit to 7% (this is the maximum allowable adjustment range, without the need to modify the fund offer terms, which require approval from the shareholders' meeting and filing with the SEC) Blackstone's own funds and employees' own pockets were used to purchase the remaining 0.9% excess redemption request (approximately $400 million). Simply put, investors of Blackstone's BCRED fund applied to redeem 7.9% of their shares this quarter, 7% were redeemed normally by the fund, and 0.9% were repurchased by Blackstone and internal employees. 3) At the same time, BCRED Fund had a new subscription capital of 2 billion US dollars in the first quarter. At the end of the year, the available liquidity of the fund is 8 billion US dollars, which is actually ample. Annual return of 9.8%. 3. Differences and Similarities between the Two 1) Both BlackRock and Blackstone funds belong to semi liquid non trading BDC, with monthly subscriptions and dividends, quarterly repurchases, and a maximum redemption limit of 5% per redemption 2) Handling Differences BlackRock's HLEND strictly adheres to the fund terms, limiting redemptions in the first quarter to 5% and not carrying forward any outstanding balances, which will be reiterated in the next quarter; Blackstone's BCRED is more proactive, raising the single redemption limit to 7% and paying $400 million out of pocket to fully meet investors' redemption requests. To maintain reputation, it also emphasizes the alignment of interests between managers and investors. 4. What can be seen? 1) There is no liquidity issue. Although there are differences in the practices of BlackRock and Blackstone, they are both within the scope of fund terms and do not mention overdue or breach of fund term agreements; Neither of them experienced a "run on the bank" or forced asset sales, but both highlighted the pain points of retail private equity credit - illiquid loans vs. limited quarterly liquidity, which can easily amplify redemptions when emotions are poor Both Blackstone and BlackRock view it as a short-term emotional fluctuation rather than a fundamental collapse (with low borrower default rates and attractive returns). 2) It's not a problem with the fund, it's investors panicking Both fund redemption applications have significantly exceeded the upper limit for the first time. It is evident that some investors have experienced panic or concerns, resulting in two fund redemption applications exceeding the quarterly standard upper limit originally designed by the fund by 5% this quarter. Of course, this is also due to factors such as increased economic uncertainty and concerns about certain borrowers (such as software and technology related industries), which have prompted investors to redeem fund shares one after another. This article is sponsored by @ bitget_zh, titled 'Bitget Buying US Stocks: Instant Entry, Smooth Trading'