By Matt Tracy
May 7 (Reuters) – Asset manager BlackRock cut the value of its private credit fund, BlackRock TCP Capital Corp, in the first quarter, it said Thursday. BlackRock TCP Capital Corp’s net asset value per share dropped roughly 5% at fair value to $6.72 in the quarter, according to its earnings disclosure. Investors have taken a closer look at the portfolios of private credit funds known as business development companies, as advances in artificial intelligence threaten the business models of companies in the software sector.
Its non-accrual rate, or the percentage of its portfolio that is well behind on interest payments, dipped to 2.8% at fair value in the first quarter from 4% in the previous quarter, it said. The fund recorded $32.7 million in net realized losses in the first quarter, according to its filings. It also disclosed $2 million in net unrealized losses, which it attributed to losses on loans to troubled software firm Pluralsight and other companies.
Six portfolio companies accounted for about two-thirds of its NAV decline, while roughly 91% of the NAV reduction was due to investments underwritten in 2021 or earlier, it added.
“Certain of these businesses benefited from high levels of pandemic-era demand but have since seen results soften,” the fund said.
“In addition, because these investments were originated in a low base-rate environment, several have struggled to adapt to a period of sustained higher interest rate.”
BlackRock TCP has bought back over 156,000 shares at a total cost of $600,000 since April 1, as part of its previously approved Company Repurchase Plan, it said.
In the fourth quarter, issuer-specific developments drove a 19% decline in NAV, with six portfolio companies accounting for two-thirds of the decrease.
(Reporting by Matt TracyEditing by Bill Berkrot)
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