Morgan Stanley private credit fund redemption requests remain elevated in third quarter

Sept 18 — Withdrawal requests at a Morgan Stanley private credit fund remained elevated in the ​third-quarter repurchase offer, according to a regulatory filing on Friday, as the investment vehicle works through its redemption queue.

Investors in Morgan Stanley's ‌North Haven Private Income Fund (PIF) sought to withdraw 11.4% of shares in the latest tender offer, ⁠a slight dip from the ​11.6% in the prior quarter. The ⁠fund will repurchase 5% of shares, the customary threshold for such vehicles.

Wealthy ‌investors have pulled money ‌from non-traded private credit funds in recent months over concerns ⁠regarding lending standards and whether software companies, ⁠a key borrower base for direct lenders, can withstand disruption from artificial intelligence.

Redemption pressure, however, may be starting to ease as asset managers work through a backlog of unfulfilled withdrawal requests.

The fund said nearly two-thirds of repurchase requests for the latest quarter came from investors who ‌were not allowed to fully cash out in ​the prior two repurchase offers.

"We believe the composition and stabilization of request activity may indicate the durability of the company's investor base. Upon completion of this quarter's repurchases, investors who sought full tender of their units during the prior two repurchase offers will have received more than 80% of their requested tendered amount," the fund said in an ​investor update.

The hit to PIF's net asset value is expected to be roughly $101 ‌million after accounting ‌for new ⁠subscriptions and dividend reinvestments.

Meanwhile, a smaller Morgan Stanley fund, North Haven Private Income Fund A (PIF A), logged about 6.8% in redemption requests, compared with 7.2% in the prior quarter. This fund will also repurchase 5% of shares.

Data from ‌major private credit vehicles ​run by Apollo, Ares and Blue Owl ‌is expected to be ⁠unveiled in ​the coming weeks.

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Tasim Zahid and ​Alan Barona)

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