Key Takeaways
- Sector: Technology Software & Gaming.
- Geography: United States.
Analysis
According to sources, Blackstone has reduced the value of its largest private credit investment, a loan to Medallia, amid underperformance at the enterprise software firm. The markdown affects the Blackstone Secured Lending Fund (BXSL), the firm’s publicly listed company.
As of June 30, 2025, the loan was valued at approximately 87 cents on the dollar, down from 89 cents in Q1 and 94 cents in Q4 2024, according to regulatory filings. The markdown reduces the value of Blackstone’s $380 million par exposure to roughly $338 million, reflecting a significant adjustment in portfolio value.
The Medallia position represented 5.37% of BXSL’s net assets at quarter-end and remains one of the most significant holdings within the Blackstone Private Credit Fund, the firm’s non-traded private credit vehicle.
Blackstone led the original $1.8 billion debt package in 2021 to finance Thoma Bravo’s acquisition of Medallia, a global provider of customer and employee experience software. The loan was structured as a recurring-revenue loan, typical in software M&A, and carries a 6.5% spread over the base rate, with 4% of interest paid in kind (PIK).
The ongoing valuation decline comes amid a period of operational strain at Medallia, which has undergone multiple leadership changes. In January 2025, Mark Bishof was appointed CEO, replacing Joe Tyrrell after only one year in the role. The company has faced stagnant revenue growth and rising operational expenses, according to industry sources. Veritas Capital had reportedly explored a partial exit from its exposure earlier this year.
Private credit assets, such as those held in BDCs and non-traded funds, are typically marked on a quarterly basis, potentially lagging real-time performance compared to liquid syndicated loans. The use of PIK features, while offering cash flow flexibility to borrowers, can also raise concerns about cash liquidity and financial stress.
Blackstone is not alone in facing portfolio headwinds. Apollo Global Management recently marked down a $600 million loan tied to a consumer tech platform, while Blue Owl Capital adjusted valuations on a commercial real estate financing portfolio as interest rate volatility and macro pressures hit near-term returns. Across the private debt space, managers are increasingly focused on asset-level stress testing and transparency amid investor scrutiny.
Despite the markdown, BXSL continues to be a major player in the private credit sector, managing a diversified loan portfolio across software, healthcare, and business services. Market analysts remain divided on whether the Medallia writedown reflects a temporary business dip or broader challenges in underwriting tech-related recurring-revenue structures.