KKR restricts withdrawals from private credit vehicle amid redemption pressure

KKR has imposed limits on investor withdrawals from one of its private credit funds after a surge in redemption requests during the first quarter of 2026, according to a report by Reuters citing a recent letter to shareholders.

The firm’s non-traded business development company, KKR FS Income Trust (K-FIT), received repurchase requests equivalent to approximately 6.3% of outstanding shares. The fund intends to meet around 80% of those requests, in line with typical liquidity management practices in the sector.

By contrast, a related vehicle, KKR FS Income Trust Select (K-FITS), was able to fully satisfy redemption requests totalling roughly 3.7% of shares. The firm noted that new investor inflows into K-FITS exceeded withdrawal requests over the same period.

K-FITS has reported an annualised net return of just under 10% as of late February, with the majority of its portfolio allocated to US direct lending, alongside exposures to asset-based finance and a smaller portion in traded credit.

The move comes amid rising redemption pressure across private credit funds, as investors grow more cautious about valuations, liquidity constraints and the financial health of borrowers within the roughly $2tn market.

Industry practice typically limits quarterly withdrawals to around 5% of fund assets, helping managers avoid forced sales of illiquid holdings. Large asset managers including BlackRock, Ares Management and Morgan Stanley have generally adhered to such thresholds.

In some cases, however, firms such as Blackstone and Oaktree Capital Management have opted to exceed standard limits in order to accommodate investor liquidity demands.