Cliffwater Caps Withdrawals Again as Investors Seek to Pull 16%

The flagship private credit fund of Cliffwater LLC capped redemptions at 5% in Q3 after investors asked to redeem approximately 16% of shares.

Cliffwater Corporate Lending Fund told shareholders in a letter Thursday that it would fulfill approximately one-third of redemption requests, according to a shareholder letter seen by Bloomberg.

Cliffwater’s Chief Executive Officer Stephen Nesbitt said in the letter the firm "remains committed to acting in the best interests," of its shareholders. Nesbitt added that investors who have requested cash since Q1 have received approximately 78% of capital.

This is not the first time Cliffwater has seen an increase in redemption requests. In Q2, investors sought to redeem approximately 17% of the fund’s shares. Meanwhile, in Q1, investors were able to redeem approximately half of the 14% they had requested, as the fund capped withdrawals at 7%. 

 The fund holds ample liquidity to meet 5% quarterly redemptions for over a year without forced asset sales, the firm previously noted.

Nesbitt said in the letter that the firm remains "optimistic" about the resilience of private credit.

Private credit funds have been capping redemptions at 5% in recent months amid rising concerns about asset quality and valuations, particularly in software lending.

Blackstone’s private credit vehicle also saw elevated redemption requests this month, capping the withdrawal limit at 5% after investors sought to tender roughly 10% of shares during the third quarter for the $77.2 billion Blackstone Private Credit Fund (BCRED). 

BCRED received $4.3 billion of repurchase requests in the third quarter, and some of that demand reflected investors who had already tried to redeem in the second quarter. In the prior quarter, the fund satisfied about half of the $4.5 billion in requests, leaving $2.3 billion outstanding, of which some was resubmitted in the latest tender.

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