KKR Limits Redemptions in Private Credit Fund Amid Rising Investor Withdrawals
From the desk of Jim Eccleston at ÍøÆسԹÏ
KKR & Co. has begun restricting investor withdrawals in one of its non-traded private credit vehicles after a surge in redemption requests, reflecting broader pressure across the asset class. As reported by AdvisorHub, the firm capped repurchases in its KKR FS Income Trust fund following elevated demand for liquidity.
According to AdvisorHub's review of a shareholder letter, KKR FS Income Trust, known as K-FIT, received repurchase requests equal to 6.3 percent of its outstanding shares for the period ending March 30. The fund enforces a quarterly repurchase cap of 5 percent, resulting in a pro rata fulfillment of approximately 80 percent of investor requests.
The action aligns with a growing trend among alternative asset managers, many of which have recently imposed or enforced redemption limits on non-traded business development companies. As AdvisorHub reports, retail investors have increased withdrawal requests amid concerns about private credit markets, including the quality of underlying loans and borrower exposure to artificial intelligence-related disruption.
A related vehicle, KKR FS Income Trust Select, or K-FITS, received repurchase requests totaling 3.7 percent of outstanding shares. Because those requests fell below the fund's repurchase threshold, KKR will satisfy them in full. Both funds generated gross inflows that exceeded total repurchase requests during the quarter, according to reporting from AdvisorHub.
According to AdvisorHub, KKR emphasized that liquidity limits form a core feature of the fund's structure. The firm stated that such constraints support long-term investment discipline and allow managers to navigate periods of market volatility without forcing asset sales.
K-FIT launched in March 2023, while K-FITS began operations in February 2024. Both funds have reported positive monthly returns since inception. As of late February, K-FIT posted an annualized return of approximately 13.9 percent, while K-FITS returned 9.82 percent. The funds reported net asset values of $1.54 billion and $943.6 million, respectively, at year-end.
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Tags: eccleston, eccleston law, private credit, fund redemptions, liquidity risk, securities law, alternative investments
