BlackRock readies US$1.3 billion private credit continuation fund

BLACKROCK is setting up a private credit loan fund that will allow it to raise as much as US$1.3 billion it can distribute to existing investors, people with knowledge of the matter said.

BlackRock is putting portions of about 300 first-lien loan positions into the deal, slated to be among the largest ever transfers of private credit into a so-called continuation fund, the people said, who requested anonymity because the trade is private. It is being arranged by Jefferies Financial Group, the people said.

A spokesperson for BlackRock declined to comment, while Jefferies did not immediately respond to a request for comment.

The fund is a way for BlackRock to capitalise on the boom in secondary trading of private credit stakes. In the kind of transfers organised by general partners such as BlackRock, new funds are created from existing loans and offered to other buyers who hunt for stake sales on the secondary market. The cash BlackRock raises can then be used to pay out existing investors.

Fund managers at firms including Ares Management, Coller Capital, Pantheon Ventures and Tikehau Capital are fuelling the growth in private credit secondaries, a nascent industry which provides an early exit route for investors to cash out of their stakes. The Florida State Board of Administration is seeking bids for stakes worth as much as US$4 billion in what would be one of the largest deals to hit the secondary market.

Earlier this year, Abry Partners closed a US$1.6 billion continuation fund for one of its private credit vehicles in what it called the biggest such fund to date. Coller Capital led the funding for that transaction. BLOOMBERG