Blackstone private debt fund marks down largest holding Medallia

A Blackstone Inc. fund further cut the value of a private credit loan for Thoma Bravo-backed software company Medallia Inc., the vehicle’s largest holding.
Blackstone’s publicly traded business development company, Blackstone Secured Lending Fund, marked the loan at around 87 cents on the dollar as of June 30, according to a regulatory filing. The loan was marked at around 89 cents at the end of the first quarter, and around 94 cents the quarter before that.

“The company is underperforming our expectations and the mark reflects that,” Brad Marshall, the global head of private credit strategies for Blackstone Credit and Insurance, said on an earnings call for the BDC on Wednesday. Marshall responded to a question from an analyst, who said the mark evidenced “some degree of stress.”

The Blackstone fund’s portion of the Medallia deal comes in at more than $380 million at par, but is currently valued at around $338 million, according to a filing. The loan made up 5.37% of the fund’s net assets at the end of June, the filing shows. It’s also one of the largest investments within Blackstone Private Credit Fund, a non-traded BDC, according to its website.  

“I would say the sponsor’s highly focused on it,” said Marshall, who is also the co-chief executive officer of the BDC. “But the company’s underperformed and that’s why the mark is lower and we’ll continue to, kind of, see what we can do with the asset.”

A representative for Blackstone declined to comment further on the markdown, while a representative for Thoma Bravo didn’t immediately respond to a request for comment.

Blackstone led a $1.8 billion debt package for Medallia in 2021, which supported Thoma Bravo’s investment in the company. Medallia provides software to help manage customer and employee satisfaction surveys.

Many broadly syndicated loans are marked on a day-to-day basis, given the liquidity in that market. But, for private credit, there’s often a lag between an asset’s current performance and its valuation on paper, given many private credit funds only have to make disclosures to their investors on a quarterly basis.

Last year, Veritas Capital attempted to reduce its exposure to the software business and was looking to trade out of the loan, Bloomberg News previously reported. Medallia hired Mark Bishof as its new chairman and CEO in January, following the exit of Joe Tyrrell in 2024, who had spent about a year in the role.

The debt charges interest at 6.5 percentage points over the base rate, with 4 percentage points paid in kind, the filings show. Payment-in-kind features allow the borrower to defer paying interest in cash, often until the debt matures.

The deal was structured as a so-called recurring-revenue loan, a financing avenue typically used by software companies that are still burning through cash to fund their expansion.

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