Blackstone Registers New Interval Fund Focused on Private Credit With the SEC

Blackstone – the world’s largest alternative asset manager with more than $1.1 trillion in assets under management – registered a new interval fund with the U.S. Securities and Exchange Commission late last week, Blackstone Private Multi-Asset Credit Fund. The fund has not yet been declared effective and many details, including fees, expenses, and targeted equity raise, have yet to be provided.

Teased this summer during the company’s second quarter earnings conference call, Blackstone Private Multi-Asset Credit Fund’s investment objectives will be to generate current income and, to a lesser extent, long-term capital appreciation. Blackstone says the fund will seek to meet its investment objectives by “employing a flexible mandate dynamically” that allocates its assets “across a wide range of credit strategies with a focus on private investments.”

The fund expects to focus on national investments but with no minimum or maximum limit on assets in investments outside of the United States. It is expected to offer investors single access to a wide spectrum of Blackstone’s credit platform, which includes without limitation:

• Private corporate credit: Privately originated, first lien senior secured and unitranche loans, second lien loans, mezzanine debt, other forms of junior or subordinated debt, preferred equity, warrants and common equity related to a credit investment;
• Asset-based credit: Performing loans and related debt instruments supported by physical assets, infrastructure, commercial real estate, as well as consumer finance, fund finance, and commercial finance, and related debt securities, including those that may be publicly traded such as commercial and residential mortgage-backed securities (“CMBS” and “RMBS”), asset backed securities (“ABS”) and significant risk transfers (“SRTs”);
• Structured credit: Exposure to diversified portfolios, ranging across asset class and credit quality, of income-producing assets, including insurance-related investments and debt and equity investments in CLOs; and
• Liquid credit: First and second lien broadly syndicated loans, secured and unsecured high yield bonds, and investment grade bonds.

To start, the fund will offer three classes of shares of common stock on a continuous basis: Class S, Class D, and Class I. It may offer additional classes of common shares in the future. The share classes will have different ongoing shareholder servicing and/or distribution fees. The purchase price per share for each class of common shares will equals its daily net asset value per share. Class S shares will be available through brokerage and transaction-based accounts, Class D shares will be available via Registered Investment Adviser firms, and Class I shares will be available to institutional investors. Class S and D shares will require an initial minimum investment of just $2,500, while the minimum initial investment requires to purchase Class I shares will typically be $1 million.

Registered under the Investment Company Act of 1940, the fund is advised by Blackstone Private Credit Strategies LLC – an affiliate of Blackstone Alternative Credit Advisors LP. It intends to elect to be treated for U.S. federal income tax purposes, and to qualify annually thereafter, as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended.

Although Blackstone will make repurchase offers, the company said only a limited number of shares will be available to purchase.

Also according to Blackstone, distributions may be funded in significant part, directly or indirectly, from temporary waivers or expense reimbursements borne by the adviser or its affiliates, that may be subject to reimbursement to the adviser or its affiliates. The repayment of any amounts owed to the affiliates will reduce future distributions. Additionally, the fund expects to use leverage, which will magnify the potential for loss on amounts invested.

The fund intends to invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. They may also be illiquid and difficult to value.

This registration news comes on the heels of Blackstone moving through the liquidations steps for another of its funds: Blackstone Floating Rate Enhanced Income Fund. Earlier this month, the fund paid a second and final distribution to shareholders of record as of the close of business on June 10, 2024. This followed a first distribution on June 13, which constituted 96.5% of the fund’s net assets.

The Blackstone Floating Rate fund reported that with the second distribution, all capital had been returned to shareholders and all distributions pursuant to the fund’s plan of liquidation are complete.

In other Blackstone activity, Blackstone Real Estate Income Trust announced yesterday that Wesley LePatner, currently the chief operating officer of the publicly registered non-traded real estate investment trust, will become its chief executive officer on Jan. 1, 2025. She will succeed Frank Cohen, who, after nearly 30 years, plans to retire from Blackstone at year-end. Cohen will remain chairman of BREIT’s board of directors.

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