U.S. federal prosecutors investigate BlackRock's private credit fund

Source: Global Market Bulletin

According to informed sources, U.S. federal prosecutors are investigating a private credit fund under BlackRock. Earlier this year, the fund made significant write-downs on its loan investment portfolio, which surprised investors. The sources said that the U.S. Attorney’s Office in Manhattan is investigating the valuation practices of BlackRock’s listed fund TCP Capital. The poor performance of this fund has become a pain point for BlackRock, even though its market value of about $350 million represents only a tiny fraction of the assets at the world’s largest investment company.

In January this year, the fund disclosed that its net asset value of held investments had fallen by 19%, with several loans being written down. Just months earlier, the fund manager had valued these loans at or near cost. Over the past year, the fund’s share price has dropped by 45%, and it now trades far below its published net asset value—the fund manager’s estimate of the value of its portfolio.