KKR caps redemptions at one of its private credit funds

April 1 (Reuters) - KKR's KKR.N non-traded business development company, KKR FS Income Trust, limited redemptions after requests for withdrawals surged, according to a letter to shareholders.

The fund, called K-FIT, received repurchase requests totaling roughly 6.3% of outstanding shares in the first quarter of 2026, of which it plans to satisfy about 80%, per the letter dated Tuesday.

On the other hand, KKR FS Income Trust Select, or K-FITS, repurchased all of the roughly 3.7% that shareholders requested to redeem. Inflows from new subscriptions outpaced investor redemption requests in the quarter, the letter said.

K-FITS has delivered an annualized net return of 9.82% as of February 28, with about 71% of the portfolio allocated to U.S. direct lending, 25% to asset-based finance, and the balance to traded credit.

Private credit funds have faced a surge in redemption requests in recent months as investor concerns mount over valuations, liquidity and borrower health in the roughly $2 trillion sector.

Large managers typically cap withdrawals at about 5% of fund assets per quarter.

Firms, including BlackRock BLK.N, Ares ARES.N and Morgan Stanley MS.N, have stuck to those limits to avoid rushed sales of illiquid assets. Others, such as Blackstone BX.N and Oaktree, have at times gone beyond usual limits to meet the liquidity demand.