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Blackstone European Private Credit Fund (ECRED)

Pioneering access to European Private Credit for eligible individual investors

as of July 31, 2023

€‎27.38

Net Asset Value Per Share

100%

Floating Rate1

ECRED: Well Positioned for Today

Leveraging the scale of the broader Blackstone Credit platform, we view now as an especially attractive time to deploy capital in European private credit to generate attractive returns for investors.

ECRED’s high quality and defensive portfolio is well-positioned for a challenging market environment in Europe.

Past performance is not necessarily indicative of future results, and there can be no assurance that Blackstone Credit will achieve comparable results or that Blackstone Credit will be able to implement its investment strategy, achieve its investment objectives or avoid significant loses. Persistent inflationary pressures and supply chain issues could affect our portfolio companies profit margins and impact the inflation-adjusted value of our loans.

Fund Overview


Income Focused

Targets the higher income potential from floating rate private credit


Established Platform

Origination and diligence expertise developed over 16 years investing in Europe


Defensive Positioning

Senior secured loans with structural protections to provide downside mitigation


Simplified Access

Monthly subscriptions and liquidity2, expected monthly distributions

Capital is at risk and investors may not get back the amount originally invested. There can be no assurance that ECRED or any Blackstone product will achieve their objectives or avoid significant losses. Distributions are not guaranteed.

ECRED is Well-Positioned in the Current Environment

With a brand-new high quality portfolio, strong defensive features and a thematic investment approach, ECRED is in a position of strength to generate income in a challenging market environment.

100%

Floating Rate1

100%

Senior Secured1

37%

Average Loan-To-Value3

RISING RATES

ECRED can benefit from rising rates

With a 100% floating rate portfolio, rising rates, alongside widening spreads and higher deal fees, may drive yield expectations higher.

Growth of private credit

Private Credit is Gaining Market Share as Banks Face Continued Headwinds

Private credit has become increasingly vital as secular constraints on European banks have left a financing gap. Recent market volatility has seen public loan and bond issuance further disrupted. ECRED is well positioned to fill this gap.

THEMATIC investment approach

Active and Thematic Investment Approach

Focus on lending to high quality, performing companies that we believe can withstand inflation and a slowing economy. We leverage the broader Blackstone platform’s deep insights and wide reaching origination and diligence capabilities so we can make better investment decisions.

RISING RATES

ECRED can benefit from rising rates

With a 100% floating rate portfolio, rising rates, alongside widening spreads and higher deal fees, may drive yield expectations higher.

Deal-level Yields in 1H 2022 vs. 2023

This chart is not intended in any way to represent the reward profile of ECRED and is being included for the purposes of showing an indication of yield premium of private credit more generally. Past performance is not necessarily indicative of future results and there can be no assurance that any proposed Blackstone Credit fund or strategy will be able to achieve comparable results to those of any of Blackstone Credit’s prior funds or strategies, and that any proposed Blackstone Credit fund or strategy will be able to implement its investment strategy, achieve its investment objectives or avoid significant losses. There can be no assurance that views and opinions expressed in this document will come to pass. Actual asset level returns for ECRED may vary substantially from the illustrations described above. While Blackstone believes that these assumptions are reasonable under the circumstances, there is no assurance that the results will be obtained, and unpredictable general economic conditions and other factors may cause actual results to vary materially. Any variations could be adverse to the actual results.

For illustrative purposes only. The above reflects Blackstone Credit’s views and beliefs unless otherwise indicated as of the date appearing in this material. The above is not intended to be indicative of future results to be achieved by the proposed fund; actual results may differ materially from the information generated through the use of illustrative components of return. Base Rate/Floor reflects historical and forward rates for 3M EURIBOR as of July 31, 2023. 1H 2022 reflects 0% floor given 3-year 3M EURIBOR swap rate was negative during the first half of 2022. Period selected to show deal yields environment prior to central bank interest rates increases and broader macroeconomic uncertainty and capital markets volatility, which resulted in wider credit spreads. 2023 reflects 3-year 3M EURIBOR swap rate as of July 31, 2023 to illustrate average base rate over the next 3 years. Deal fees and call premium are amortized over an average hold of 3 years. Spread, deal fees and call premiums are based on general market observations and deals in the Blackstone Credit pipeline.

Growth of private credit

Private Credit is Gaining Market Share as Banks Face Continued Headwinds

Private credit has become increasingly vital as secular constraints on European banks have left a financing gap. Recent market volatility has seen public loan and bond issuance further disrupted. ECRED is well positioned to fill this gap.

Slowdown in Public Markets
European Leveraged Loans and High Yield Issuance

Past performance is not necessarily indicative of future results. There can be no assurance that any Blackstone strategy or product will achieve their objectives or avoid significant losses.

Note: Unless otherwise noted, the above reflects Blackstone’s views and beliefs. Source S&P LCD Leveraged Loans as of December 31, 2022. Loans and High Yield issuance measured as the cumulative issued volume (in € billion) of European leveraged loans and high yield bonds between January 1 and December 31 in 2021 and 2022 respectively.

THEMATIC investment approach

Active and Thematic Investment Approach

Focus on lending to high quality, performing companies that we believe can withstand inflation and a slowing economy. We leverage the broader Blackstone platform’s deep insights and wide reaching origination and diligence capabilities so we can make better investment decisions.

Top 5 Sectors
Highly focused on “good neighborhoods”

Past performance is not necessarily indicative of future results and there can be no assurance that any proposed Blackstone Credit fund or strategy will be able to achieve comparable results to those of any of Blackstone Credit’s prior funds or strategies, and that any proposed Blackstone Credit fund or strategy will be able to implement its investment strategy, achieve its investment objectives or avoid significant losses. Persistent inflationary pressures and supply chain issues could affect our portfolio companies profit margins and impact the inflation-adjusted value of our loans.

As of July 31, 2023. Reflects Blackstone Credit’s views and beliefs. Please refer to the “Important Disclosure Information” below for important information. Blackstone Credit is under no obligation to update this material. Reflects percentages based on market value. 

Blackstone Credit Recognized by Industry Awards4


Learn more about ECRED


Summary of Key Risk Factors

Capitalised terms herein not defined in this document have the meaning ascribed to them in the latest visa stamped version of the prospectus of ECRED Feeder SICAV.

Under the packaged retail and insurance-based investment products (PRIIPs) Regulation, we have classified this product as 5 out of 7, which is a medium-high risk class. This rates the potential losses from future performance at a medium-high level, and poor market conditions could impact our capacity to pay you.

There is no specific recommended holding period for the product. The actual risk can vary significantly and you may get back less. You may not be able to sell your Shares in ECRED Feeder SICAV easily or you may have to sell them at a price that significantly impacts on how much you get back. The summary risk indicator is a guide to the level of risk of this product compared to other products. It shows how likely it is that the product will lose money because of movements in the markets or because we are not able to pay you. The purchase of Shares in ECRED Feeder SICAV entails a high degree of risk and is suitable for sophisticated investors for whom an investment in ECRED Feeder SICAV does not represent a complete investment program, and who fully understand ECRED Feeder SICAV’s strategy, characteristics and risks, including the use of borrowings to leverage Investments, and are capable of bearing the risk of an investment in ECRED Feeder SICAV. There are no guarantees or assurances regarding the achievement of investment objectives or performance. This product does not include any protection from future market performance so you could lose some or all of your investment. If we are not able to pay you what is owed, you could lose some or all of your investment.

For the purpose of the below, references to “ECRED” are references to ECRED Feeder SICAV and its sub-funds, ECRED Master FCP, the ECRED Aggregator and the Parallel Entities (if any) (each as defined in the Prospectus).

Lack of Liquidity. There is no current public trading market for the Shares, and the Sponsor does not expect that such a market will ever develop. Therefore, redemption of Shares by ECRED Feeder SICAV will likely be the only way for you to dispose of your Shares. ECRED Feeder SICAV expects to redeem Shares at a price equal to the applicable NAV as of the Redemption Date and not based on the price at which you initially purchased your Shares. Subject to limited exceptions, Shares redeemed within one year of the date of issuance will be redeemed at 98% of the applicable NAV as of the Redemption Date. As a result, you may receive less than the price you paid for your Shares when you sell them to ECRED Feeder SICAV pursuant to ECRED Feeder SICAV’s redemption program.

The aggregate NAV of total redemptions (on an aggregate basis (without duplication) across ECRED, but excluding any Early Redemption Deduction applicable to the redeemed Shares) is generally limited to 2% of aggregate NAV per calendar month of all Parallel Entities and the ECRED Aggregator (measured using the aggregate NAV as of the end of the immediately preceding month) and 5% of such aggregate NAV per calendar quarter (measured using the average of such aggregate NAV as of the end of the immediately preceding three months), except in the event of exceptional circumstances described below.

In exceptional circumstances and not on a systematic basis, ECRED Feeder SICAV may make exceptions to, modify or suspend, in whole or in part, the redemption program if in the Investment Manager’s reasonable judgment it deems such action to be in ECRED’s best interest and the best interest of ECRED’s investors, such as when redemptions of Shares would place an undue burden on ECRED’s liquidity, adversely affect ECRED’s operations, risk having an adverse impact on ECRED that would outweigh the benefit of redemptions of Shares or as a result of legal or regulatory changes. Material modifications, including any amendment to the 2% monthly or 5% quarterly limitations on redemptions and suspensions of the redemption program will be promptly disclosed to Shareholders on ECRED’s website. If the redemption program is suspended, the Investment Manager will be required to evaluate on a monthly basis whether the continued suspension of the redemption program is in ECRED’s best interest and the best interest of ECRED’s investors.

The vast majority of ECRED’s assets are expected to consist of Investments that cannot generally be readily liquidated without impacting ECRED’s ability to realize full value upon their disposition. Therefore, ECRED may not always have a sufficient amount of cash to immediately satisfy Redemption Requests. As a result, your ability to have your Shares redeemed by ECRED may be limited and at times you may not be able to liquidate your investment.

Conflicts of Interest. ECRED Feeder SICAV is subject to certain conflicts of interest arising out of ECRED’s relationship with Blackstone, including the Sponsor and its affiliates. Members of the Board of Directors are also executives of Blackstone and/or one or more of its affiliates. There is no guarantee that the policies and procedures adopted by ECRED Feeder SICAV, the terms of its Articles of Incorporation, the terms and conditions of the Investment Management Agreement, that the policies and procedures adopted by the Board of Directors, the Sponsor, the AIFM, Blackstone and their affiliates, will enable ECRED Feeder SICAV to identify, adequately address or mitigate these conflicts of interest, or that the Sponsor will identify or resolve all conflicts of interest in a manner that is favorable to ECRED Feeder SICAV.

Currency Risks. A portion of ECRED Feeder SICAV’s assets may be denominated in a currency that differs from the functional currency of ECRED Feeder SICAV or an investor’s functional currency. Consequently, the return realized on any investment by such investor may be adversely affected by movements in currency exchange rates over the holding period of such investment and the life of ECRED Feeder SICAV generally, costs of conversion and exchange control regulations in such jurisdiction, in addition to the performance of the investment itself. Shareholders holding shares with a functional currency other than Euro acknowledge that they are exposed to fluctuations of the Euro foreign exchange rate and/or hedging costs, which may lead to variations on the amount to be distributed. This risk is not considered in the indicator shown above. Fund charges will be incurred in multiple currencies, meaning that payments may increase or decrease as a result of currency exchange fluctuations.

Highly Competitive Market for Investment Opportunities. The activity of identifying, completing and realizing attractive investments is highly competitive, and involves a high degree of uncertainty. There can be no assurance that ECRED Feeder SICAV will be able to locate, consummate and exit investments that satisfy its objectives or realize upon their values or that ECRED Feeder SICAV will be able to fully invest its Shareholders’ investment. There is no guarantee that investment opportunities will be allocated to ECRED Feeder SICAV and or that the activities of Blackstone’s other funds having similar or overlapping investment objectives will not adversely affect the interests of ECRED Feeder SICAV.

Limited Operating History: Relation to Prior Investment Results. ECRED Feeder SICAV has not commenced operations and therefore has no operating history upon which prospective investors may evaluate its performance. Although Blackstone Credit has made investments through certain of its funds and separately managed accounts that would have been within the investment objective of ECRED Feeder SICAV, ECRED Feeder SICAV will make Investments under different geographic, market, regulatory and economic conditions than those prevalent when the previous investments were made. The size and type of Investments to be made by ECRED Feeder SICAV could differ from prior Blackstone investments (including prior Blackstone credit investments). Where provided, as part of the Prospectus or otherwise, the prior investment results of Blackstone Credit are provided for illustrative purposes only and not to imply that such results will be obtained in the future. Although Blackstone’s investment professionals have considerable prior experience in private originated and privately negotiated first lien, senior loan and other debt investments, the past investment performance of Blackstone Credit (and investment vehicles sponsored or managed by Blackstone Credit) is not necessarily indicative of ECRED Feeder SICAV’s future results, and there can be no assurance that ECRED Feeder SICAV will achieve comparable results, be able to effectively implement its investment strategy, achieve its investment or asset allocation objectives, be profitable or avoid substantial losses.

Other Blackstone and Blackstone Credit Clients; Allocation of Investment Opportunities. Certain inherent conflicts of interest arise from the fact that the Sponsor, Blackstone Credit and Blackstone provide investment management, advisory and sub-advisory services to ECRED Feeder SICAV and Other Clients. Blackstone Credit and/or Blackstone may give advice to, and recommend securities for, Other Clients that may differ from advice given to, or securities recommended or bought for, ECRED Feeder SICAV, even though their investment objectives may be the same as or similar to those of ECRED Feeder SICAV. While Blackstone Credit will seek to manage potential conflicts of interest in a fair and equitable manner, the portfolio strategies employed by Blackstone Credit and Blackstone in managing their respective Other Clients are likely to conflict from time to time with the transactions and strategies employed by the Sponsor in managing ECRED Feeder SICAV and may affect the prices and availability of the securities and instruments in which ECRED Feeder SICAV invests.

Recent Market Events Risk. Local, regional, or global events such as war (e.g., Russia/Ukraine), acts of terrorism, public health issues like pandemics or epidemics (e.g., COVID-19), recessions, or other economic, political and global macro factors and events could lead to a substantial economic downturn or recession in the U.S. and global economies and have a significant impact on the Fund and its investments.  The recovery from such downturns is uncertain and may last for an extended period of time or result in significant volatility, and many of the risks discussed herein associated with an investment in the Fund may be increased.

Reliance on Key Management Personnel. The success of the Fund will depend, in large part, upon the skill and expertise of certain Blackstone professionals. In the event of the death, disability or departure of any key Blackstone professionals, the business and the performance of the Fund may be therefore adversely affected. Some Blackstone professionals may have other responsibilities, including senior management responsibilities, throughout Blackstone and, therefore, conflicts are expected to arise in the allocation of such personnel’s time (including as a result of such personnel deriving financial benefit from these other activities, including fees and performance-based compensation).

Risk of Capital Loss and No Assurance of Investment Return. ECRED offers no capital protection guarantee. This investment involves a significant risk of capital loss and should only be made if an investor can afford the loss of its entire investment. There are no guarantees or assurances regarding the achievement of investment objectives or performance. There may be little or no near-term cash flow available to the Shareholders from ECRED Feeder SICAV, and there can be no assurance that ECRED Feeder SICAV will make any distribution to the Shareholders. This product does not include any protection from future market performance so you could lose some or all of your investment. If we are not able to pay you what is owed, you could lose some or all of your investment. A fund’s performance may be volatile. An investment should only be considered by sophisticated investors who can afford to lose all or a substantial amount of their investment. A fund’s fees and expenses may offset or exceed its profits. In considering any investment performance information contained in the document and related materials (“the Materials”), recipients should bear in mind that past performance is not necessarily indicative of future results. Investors should draw no conclusions from the performance of any other investments of Blackstone Credit or Blackstone and should not expect to achieve similar results.

Sustainability Risks. The Fund may be exposed to an environmental, social or governance event or condition that, if it occurs, could have a material adverse effect, actual or potential, on the value of the investments made by the Fund. Sustainability risks are assessed into investment decisions relating to the Fund.

Target Allocations. There is no guarantee that such strategies and targets will be achieved and any particular investment may not meet the target criteria.

Use of Leverage. The Fund intends to borrow money. If returns on such investment exceed the costs of borrowing, investor returns will be enhanced. However, if returns do not exceed the costs of borrowing, Fund performance will be depressed. This includes the potential for the Fund to suffer greater losses than it otherwise would have. The effect of leverage is that any losses will be magnified. The use of leverage involves a high degree of financial risk and will increase ECRED’s exposure to adverse economic factors such as rising interest rates, downturns in the economy or deteriorations in the condition of the Investments.

This leverage may also subject ECRED and its Investments to restrictive financial and operating covenants, which may limit flexibility in responding to changing business and economic conditions. For example, leveraged entities may be subject to restrictions on making interest payments and other distributions.

Valuations Matters – The valuation methodologies used to value any investment in which ECRED Feeder SICAV invests will involve subjective judgments and projections and may not be accurate. Valuation methodologies are based on assumptions and opinions about future events, which may or may not turn out to be correct. Valuation methodologies may permit reliance on a prior period valuation of particular Investments. Ultimate realization of the value of an asset depends to a great extent on economic, market and other conditions beyond Blackstone Credit’s control. Accordingly, there is no guarantee that the fair value as determined by the AIFM (with the assistance of Blackstone Credit) at any given point in time will represent the value that will be realized by ECRED Feeder SICAV on the eventual disposition of the Investment or that would, in fact, be realized upon an immediate disposition of the Investment.

  1. As a percentage of debt investments in ECRED’s portfolio, which represents 99.9% of ECRED’s investments.
  2. Monthly liquidity subject to a notice period of 30 days. Redemptions expected to be settled within 60 calendar days following the effective redemption date.
  3. Reflects average closing loan-to-value of private credit investments only and weighted by funded market value. Calculated as net debt through respective Blackstone Credit loan tranche divided by estimated enterprise value of the portfolio company, at closing of the investment.