BlackRock Puts TCP Capital's $671 Million of Loans on the Block

BlackRock is exploring a potential sale of its loan portfolio owned by TCP Capital Corp. (NASDAQ: TCPC) in another step towards reshaping the private credit vehicle after a difficult stretch. 

The asset manager has brought in Keefe, Bruyette & Woods to gauge interest from potential buyers for the portfolio, which is valued at approximately $671 million, sources familiar with the situation told Bloomberg. 

Discussions remain preliminary and are subject to change, although it is noted that Ares Management is among some of the firms that have been approached. TCP has been considering a range of options, including returning the capital to its shareholders, merging with another entity, or reinvesting in the portfolio, Bloomberg added.

Earlier this month, it was announced that TCP Capital Corp. was selling a $523 million portfolio of private credit investments to shore up its balance sheet, reduce leverage, and regain flexibility after mounting pressure on its publicly traded lending vehicle. TCPC noted that its remaining assets had a fair market value of $671 million.

TCPC’s restructuring comes as investors increasingly question whether private credit portfolios are prepared for a prolonged period of higher rates, weaker borrowers and slower exits.

The fund, which currently trades at a discount to NAV, has struggled recently due to increased pressure from distressed loans, asset markdowns, and declining returns. 

In May, federal prosecutors were looking into the fund’s valuation practices following markdowns on certain assets. 

In January, TCPC announced an estimated 19% decline in Net Asset Value (NAV), largely tied to portfolio restructurings primarily around e-commerce stocks and the bankrupt Renovo Home Partners, Seeking Alpha reported at the time. Following the announcement, shares of the stock dropped over 14%.

BlackRock became the manager of the fund through its 2018 acquisition of middle-market lender Tennenbaum Capital Partners. Last year, the firm acquired HPS Investment Partners for approximately $12 billion, creating Private Financing Solutions (PFS), which combined the firms’ private credit, GP and LP solutions, and private and liquid CLO businesses into one integrated platform.

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