Blackstone closed its first semi-liquid US direct lending fund Tuesday on $22 billion, as institutional demand for exposure to private credit persists.
Blackstone Senior Direct Lending Fund surpassed the firm’s $10 billion target. The close includes the evergreen fund and its related vehicles and brings Blackstone’s direct lending AUM to over $123 billion.
The fund’s size is indicative of sustained limited partner demand for exposure to direct lending, as private debt instruments continue to produce historically high returns. In 2023, direct lending funds returned 11.1% net-of-fees, trumping buyout fund returns and most other private market strategies, according to PitchBook’s H1 2024 Global Private Debt Report.
As a result, direct lending funds tend to gather the largest capital commitments relative to other private credit strategies. By the end of H1 2024, direct lending vehicles accounted for 54.9% of all private debt fund closures year-to-date, according to the report.
Blackstone’s direct lending fund adds to its swath of products in the space, including its Blackstone Private Credit Fund, which at $35 billion was the largest nontraded BDC offered in the first half of the year. Blackstone said its credit and insurance strategy deployed or committed $40 billion in direct lending in Q3, more than double its total in 2023.
Other asset managers are ramping up their direct lending capabilities, as private debt competes against banks amid declining interest rates to supply debt for private equity deals. For example, Ares Management closed its third US direct lending flagship fund on $33.6 billion in July.
Ezra Bailey
Featured image by Ezra Bailey/Getty Images
Learn about our editorial standards.
