Redemption requests stay elevated at Morgan Stanley private credit fund in Q3

Sept 18 (Reuters) - According to a Friday regulatory filing, redemption requests at a Morgan Stanley private credit fund stayed high during its third-quarter repurchase offer as the vehicle continues to work through its queue of withdrawals.

In the most recent tender offer, investors in Morgan Stanley's North Haven Private Income Fund (PIF) requested redemptions amounting to 11.4% of shares, down modestly from 11.6% a quarter earlier. The fund plans to buy back 5% of shares, the usual cap for such vehicles.

In recent months, affluent investors have withdrawn capital from non-traded private credit funds amid worries about lending standards and about whether software firms—a major source of borrowers for direct lenders—can weather disruption caused by artificial intelligence.

Redemption pressure, though, could be beginning to subside as asset managers process a backlog of withdrawal requests that have not yet been fulfilled.

The fund reported that almost two-thirds of repurchase requests in the latest quarter originated from investors who had not been permitted to fully redeem during the two previous repurchase offers.

The fund said in an investor update that it believes the makeup and stabilization of request activity may signal durability of its investor base, adding that after this quarter's repurchases, investors who requested full tenders in the prior two offers will have received over 80% of the amount they sought.

After factoring in new subscriptions and dividend reinvestments, the expected impact on PIF's net asset value is about $101 million.

In comparison, a smaller Morgan Stanley vehicle, North Haven Private Income Fund A (PIF A), recorded redemption requests of roughly 6.8%, versus 7.2% in the preceding quarter. It will also repurchase 5% of its shares.

Figures from major private credit funds managed by Apollo, Ares and Blue Owl are expected to be released in the weeks ahead.