KKR restricts redemption for a private credit fund under its management

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According to a letter to shareholders, KKR’s non-listed commercial development company KKR FS Income Trust has restricted redemptions after a surge in redemption requests.

The fund named K-FIT received redemption requests amounting to approximately 6.3% of the issued shares in the first quarter of 2026. According to the letter released on Tuesday, the fund plans to fulfill about 80% of these requests.

On the other hand, KKR FS Income Trust Select (K-FITS) repurchased all of the approximately 3.7% of shares requested for redemption by shareholders. The letter states that new subscription inflows this quarter exceeded investors’ redemption requests.

As of February 28, K-FITS’s annualized net return was 9.82%, with about 71% of the portfolio allocated to U.S. direct loans, 25% to asset-backed loans, and the remaining to trading credit.

In recent months, private credit funds have faced a surge in redemption requests due to increasing concerns among investors about the valuation, liquidity, and borrower health of the approximately $2 trillion private credit industry.

Large fund managers typically set quarterly redemption limits at around 5% of the fund’s assets.

Several firms, including BlackRock, Ares, and Morgan Stanley, have adhered to this limit to avoid hurriedly selling illiquid assets. However, companies like Blackstone Group and Oaktree Capital sometimes break these conventional limits to meet liquidity needs.

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Editor: Yu Jian SF069