Morgan Stanley private credit fund redemption requests remain elevated in third quarter

Sept 18 (Reuters) - Withdrawal requests ‌at a Morgan ​Stanley ​private credit fund remained elevated in the third-quarter repurchase offer, according to a regulatory filing on Friday, as the investment vehicle ‌works through its redemption queue.

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.

Wealthy investors 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 artificial intelligence.

Redemption pressure, however, may be starting to ease as asset managers work ​through a backlog of unfulfilled withdrawal requests.

The fund said 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.

The hit to PIF's net asset value is expected to be roughly $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.

Data from major private ⁠credit vehicles run by Apollo, ‌Ares and Blue Owl ​is expected to be unveiled in the coming weeks.

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Tasim Zahid and ‌Alan Barona)

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