CHICAGO: Cliffwater LLC is facing redemption requests in excess of 7% from its flagship private credit fund, according to sources.
The US$33bil Cliffwater Corporate Lending Fund is structured as an interval fund, requiring it to repurchase up to 5% of its shares each quarter if investor requests meet that threshold.
If redemptions exceed 5%, Cliffwater has discretion to repurchase as much as 7% of outstanding shares.
Founded by Stephen Nesbitt, Cliffwater is the latest firm in the US$1.8 trillion private credit market to see an investor exodus over concerns about loan quality and exposure to software companies that could be disrupted by advancements in artificial intelligence.
The fund’s tender window is set to close on Tuesday, and the firm hasn’t yet decided whether to limit redemptions at the 5% or 7% mark, said the sourcess, who asked not to be named discussing non-public information. A representative for Cliffwater declined to comment.
Last week BlackRock Inc capped withdrawals from its HPS Corporate Lending Fund at 5% after investors sought to cash in nearly double that amount, the first major instance of a private credit manager limiting redemptions on a perpetual vehicle since the recent market turmoil began. — Bloomberg
