Morgan Stanley’s private credit fund continued to witness elevated withdrawal requests in the third-quarter repurchase offer, stated a regulatory filing from the Wall Street giant, as the venture’s investment vehicle tries to address the high redemption queue from the investors.
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,” the filing stated further.
However, Morgan Stanley is not witnessing the phenomenon alone, as wealthy investors in general 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 the AI.
Other industry giants like Apollo, Ares, and Blue Owl have also felt the pain and are likely to release similar data in the coming weeks.
Redemption pressure, however, may be starting to ease as asset managers work through a backlog of unfulfilled withdrawal requests.
As per the fund’s filing, 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.
As per Morgan Stanley, the hit to PIF’s net asset value is expected to be roughly USD 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.