BlackRock cuts value of private debt fund by 19%, waives fee

A BLACKROCK private debt fund expects to mark down the net value of its assets 19 per cent after a string of troubled loans weighed on results, marking the latest sign of pressure in the private credit market.

BlackRock TCP Capital, a publicly traded middle-market lending fund, expects to cut its net asset value per share to between US$7.05 and US$7.09 for the quarter ended Dec 31, according to a regulatory filing. That compares to US$8.71 as of Sep 30.

The fund has struggled in part because of its exposure to e-commerce aggregators – companies that buy and manage Amazon sellers – as well as troubled home improvement company Renovo Home Partners, which has filed for bankruptcy with plans to liquidate.

The vehicle is a business development company, which pools together private credit loans and trades like a stock. BlackRock said it has waived one-third of its management fee for its last quarter.

BDC shares have been hit over the past year, with investors concerned over private credit returns, underwriting standards and increased regulatory scrutiny.

BlackRock TCP had a market capitalization of about US$497 million as of Friday’s (Jan 23) close.

The fund has been a component of BlackRock’s private credit offering since the asset manager acquired Tennenbaum Capital Partners in 2018. BlackRock last year bought HPS Investment Partners for US$12 billion to boost its footprint in private markets.

Shares of BlackRock TCP fell as much as 8.4 per cent in post-market trading. BLOOMBERG