Cliffwater Private Credit Fund Stung by 17% Redemption Requests
Cliffwater LLC’s flagship private credit fund capped redemptions at 5% in the second quarter after investors looked to pull about 17% of shares, in a sign of enduring pressure on the $1.8 trillion market.
The $31 billion Cliffwater Corporate Lending Fund informed shareholders Tuesday that they’d get about one-third of their requested money back, according to a letter seen by Bloomberg. The prior quarter, investors got back around half of the roughly 14% they asked for, with the vehicle choosing to cap withdrawals at 7%.
But shortly after Cliffwater’s decision in March, S&P Global Ratings lowered its outlook on the interval fund to negative from stable, warning that the 5% redemption threshold is “an important guardrail.”
“Our repurchase program is intentionally designed to provide shareholders with periodic liquidity that aligns with the fund’s long-term investment strategy and its underlying assets,” Cliffwater Chief Executive Officer Stephen Nesbitt said in the letter to investors.
A representative for Cliffwater declined to comment. The firm has said previously that the fund, which has delivered a roughly 9.4% annualized net return since it was formed in 2019, has enough liquidity to meet 5% redemptions for more than a year without selling a position or an asset.
Cliffwater has become something of an unlikely giant in the private credit market by raising money at a rapid clip and deploying it across both direct loans and funds that do such lending themselves.
Other non-traded business development companies are set to report the results of their second-quarter tender offers in the coming weeks. In the previous period, some like Blackstone Inc.’s BCRED went to extraordinary lengths to let investors cash out, while other funds at Apollo Global Management Inc., BlackRock Inc. and Blue Owl Capital Inc. enforced their 5% caps.
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