HPS limits private credit fund inflows amid surging demand

HPS Investment Partners has limited inflows into its corporate lending fund in order to manage a surge in demand for private credit.

The $10bn (£7.85bn) HPS Corporate Lending Fund has begun turning down new investors, and placing them on a waitlist. The investors are believed to be mostly high net worth individuals (HNWIs).

According to a Bloomberg report, the cap on the fund is set to shrink contributions from its main distributor, JPMorgan Chase.

Read more: HPS raises $10bn for second Core Senior Lending Fund

Investors have been flocking to private credit funds in recent months, attracted by the double digit returns and opportunities for diversification.

Preqin has estimated that the total value of the private credit market is $1.7tn, but JPMorgan recently suggested that the overall private credit market could be worth as much as $3tn at present.

Read more: Private debt diversifies from direct lending

There have been a raft of new private credit fund launches over the past year, raising billions in new commitments from both institutional investors and HNWIs alike.

However there have been some concerns that in their rush to accept new investors, fund managers could start accepting less creditworthy deals which could increase the risk of future losses.

HPS insiders have suggested that the fund has chosen to limit inflows in order to give it the flexibility to walk away from deals that it doesn’t find attractive.

Read more: JPMorgan sees growth opportunity in private credit