Cliffwater Corporate Lending Fund Prorates Again as Q3 Requests Hit 16%
Cliffwater Corporate Lending Fund capped third-quarter repurchases at 5% of outstanding shares after investors sought to redeem about 16%, the second straight quarter the $30.4 billion interval fund has held to its minimum offer and prorated requests.
The fund told shareholders in a Sept. 3 letter that it would fill about one-third of requests. Requests eased slightly from about 17% in the second quarter, when the fund also repurchased 5% of shares on a pro rata basis.
The fund said investors who have requested repurchases since the first quarter have received about 78% of their capital to date.
The second-quarter offer, which closed May 29, returned about $1.58 billion to shareholders in June. Cliffwater has not yet filed figures for the third-quarter payout.
The two prorated quarters follow a first quarter in which requests reached about 14% and Cliffwater used its discretion to repurchase an additional 2% of shares. The fund bought back 7% of its shares, or $2.34 billion, in that offer. AltsWire reported on the first-quarter requests in March.
As an interval fund, Cliffwater Corporate Lending Fund must offer each quarter to repurchase at least 5% of its outstanding shares. When an offer is oversubscribed, the fund may buy back up to an additional 2%. If it declines to do so, or if requests exceed 7%, it repurchases shares pro rata.
The fund may accept in full tenders from shareholders who own less than $2,500 in shares and tender all of them, as well as tenders tied to required minimum distributions from individual retirement accounts and other qualified retirement plans. Unfilled requests do not carry forward. Shareholders must resubmit in a later offer and receive no priority.
“Our repurchase program is intentionally designed to provide shareholders with periodic liquidity,” said Stephen Nesbitt, Cliffwater’s chief executive officer, in a June letter to investors. In the September letter, Nesbitt said private credit has remained resilient.
Cliffwater has said the fund holds enough liquidity to meet 5% quarterly repurchases for more than a year without selling assets. After the first-quarter decision, S&P Global Ratings revised its outlook on the fund to negative from stable, according to Bloomberg.
The fund’s net asset value per share fell to $10.28 as of July 23 from $10.52 at the March 10 repurchase pricing date. Net assets declined to $30.38 billion at June 30 from $31.26 billion at March 31.
New share sales also slowed during the second quarter, to $195.5 million in May and $216 million in June from $413.4 million in April.
The fund’s next repurchase request deadline is Dec. 1.
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