BlackRock Inc. Chief Executive Officer Larry Fink sees increased demand for private credit from big institutional investors like insurers, even as retail clients grow skittish over the asset class and seek to redeem more of their shares.
“There’s been a lot of attention on private credit, but the headlines do not reflect what clients are telling us, what our portfolio data shows or where we see the market going,” Fink said Tuesday after the asset manager reported financial results buoyed by fee growth. “Actually, institutional demand is accelerating.”
In one case, an existing insurance client signed a deal in the quarter for a multibillion-dollar rotation into private high-grade credit, Fink said. He suggested similar deals are in the works.
BlackRock became a major player in the $1.8 trillion private credit industry last year when it bought HPS Investment Partners for $12 billion as part of its aggressive expansion beyond public assets.
Since the HPS deal was completed, private credit has faced increasing scrutiny over the underlying quality of loans and exposure to firms vulnerable to artificial intelligence disruption. Last month, BlackRock curbed withdrawals in its $26 billion HPS Corporate Lending Fund after requests spiked.
In recent weeks, retail investors in other non-traded business development companies and private credit interval funds have been seeking redemptions in record numbers — spurring other money managers to curb redemptions at 5% of shares.
“My own sense of the markets today across some of the private credit tumult is that this is an opportunity for BlackRock to take share in that market, particularly in private markets across wealth platforms,” Chief Financial Officer Martin Small said on the analysts call. “We actually think some of this shakeout in credit is actually good for our organic base fee growth profile.”
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