BlackRock Faces Challenges in Private Credit: Should Investors Consider Selling Shares?

BlackRock Faces Private Credit Challenges Amid Market Uncertainty

BlackRock’s stock (BLK) has declined by 10.7% this year, largely due to recent turbulence in the private credit sector, which has dampened investor confidence. The firm recently limited withdrawals from its HPS Corporate Lending Fund (HLEND) after a surge in redemption requests, as first reported by the Financial Times.

HLEND, one of BlackRock’s largest private credit vehicles with around $26 billion in assets, received redemption requests totaling nearly $1.2 billion this quarter—about 9.3% of its net asset value. However, the fund will only process $620 million in redemptions, adhering to its 5% quarterly limit.

BlackRock’s acquisition of HPS Investment Partners last year was part of its strategy to diversify into private credit, moving beyond traditional public markets. The company has also expanded its reach by acquiring ElmTree Funds, Preqin, and Global Infrastructure Partners, strengthening its Aladdin technology platform and presence in the fast-growing private markets data space.

Despite these efforts, alternative asset managers—including BlackRock, Apollo Global, Blue Owl Capital, and Blackstone—are under pressure from rising redemption rates, tighter liquidity, increased scrutiny of valuations, and concerns over potential defaults. As a result, shares of these companies have seen negative performance this year.

Year-to-Date Price Performance

Source: Zacks Investment Research

Industry-Wide Private Credit Concerns

The spike in HLEND redemption requests comes as worries about systemic risks in private credit intensify. Earlier this month, Blackstone raised its redemption cap from 5% to 7% to address increased investor withdrawals. Similarly, Blue Owl Capital recently restricted withdrawals from one of its retail-focused funds. Apollo Global’s CEO, Marc Rowan, has also cautioned that the private credit industry may face a shakeout due to rising defaults, especially among software company loans.

Given these developments, it is crucial to assess how these challenges might impact BlackRock and determine the best approach for investors considering the stock in today’s environment.

BlackRock’s Growth Through Product Diversification

BlackRock has prioritized expanding its product offerings and revenue streams, supported by strategic acquisitions. This approach has fueled steady growth in assets under management (AUM), which achieved a compound annual growth rate (CAGR) of 10.1% from 2020 to 2025, reaching a record $14.04 trillion by the end of 2025.

In 2025, BlackRock attracted a record $698 billion in net inflows, following $641 billion in 2024. The company’s ongoing efforts to enhance its iShares ETF platform—now offering over 1,700 ETFs globally—and its focus on active equity strategies are expected to sustain this momentum. BlackRock is also expanding its iBonds ETF lineup and launching a leveraged loan fund to further diversify its products and strengthen its market position.

Internationally, BlackRock has partnered with Jio Financial to grow its business in India and now serves clients worldwide, with nearly 40% of AUM coming from outside the United States. These diversification and global expansion initiatives are expected to improve the company’s revenue mix, reduce concentration risk, and support further AUM growth. Over the past five years, BlackRock’s GAAP revenues have grown at an 8.4% CAGR.

Capital Returns and Shareholder Value

As of December 31, 2025, BlackRock reported $11.5 billion in cash and equivalents, with total borrowings of $12.8 billion, reflecting a robust liquidity position.

The company has consistently raised its dividend, announcing a 10% increase to $5.73 per share in January 2026. Over the past five years, BlackRock has raised its dividend five times, achieving an annualized growth rate of 5.02%. Its dividend payout ratio stands at 43%, compared to 93% for Blackstone, 27% for Apollo Global, and 107% for Blue Owl Capital.

BlackRock also maintains an active share repurchase program. In January, the board authorized the repurchase of an additional 7 million shares, with plans to buy back at least $1.8 billion in stock this year, following $1.6 billion in buybacks in 2025.

Analyst Outlook for BlackRock

Analyst estimates for BlackRock’s earnings in 2026 and 2027 have remained steady at $53.64 and $60.91 per share, respectively, indicating projected growth of 11.5% and 15.4%.

Estimate Revision Trend

Source: Zacks Investment Research

Valuation and Investment Considerations

BlackRock’s forward 12-month price-to-earnings (P/E) ratio stands at 17.32, which is higher than the industry average of 12.66, suggesting the stock is relatively expensive.

P/E Forward 12 Months

Source: Zacks Investment Research

Compared to peers such as Blackstone, Apollo Global, and Blue Owl Capital, BlackRock trades at a premium. Additionally, the company’s expenses have increased at a 10.3% CAGR over the past five years, driven by higher administrative costs and acquisitions. These costs are expected to remain elevated as BlackRock continues to expand. Geopolitical risks and currency fluctuations could also impact international revenues.

Despite the challenges in private credit, BlackRock’s exposure remains limited—alternatives, including private markets, make up just 3% of total AUM as of December 2025. With record AUM and ongoing diversification, BlackRock is well-positioned, but investors should monitor private credit risks and the company’s strategic responses. Current shareholders may consider holding their positions for now.

At present, BLK holds a Zacks Rank #3 (Hold).