HPS Corporate Capital Solutions Fund - A Plain-English Guide

I wrote this guide to help you understand the HPS Corporate Capital Solutions Fund. My goal is to explain the complex details so you can decide if this fund fits your personal goals.

1. What does this fund do?

Think of this fund as a specialized lender for large, established companies. Instead of a bank, they provide "private credit"—acting as a financial partner. They are a "Business Development Company," a structure designed to help companies grow. Managed by HPS Investment Partners, they focus on "upper middle market" companies. These businesses are already large, typically earning between $75 million and $1 billion in annual profit. By focusing on this scale, the fund targets stable companies to help them grow, buy other businesses, or refinance debt.

2. How they make money

The fund earns steady income by collecting interest on loans. These loans usually have floating interest rates that adjust with the market. As of December 31, 2025, they have invested about $2.18 billion across 188 companies. Over 82% of this is in "first lien debt." This means if a company struggles, HPS is first in line to get paid back, which adds a layer of safety. The fund aims to earn more than traditional bonds by taking advantage of the private credit market.

3. Why HPS thinks they have an "Edge"

HPS has over 290 investment professionals globally.

• They don't just follow the crowd: Over 55% of their deals come from direct relationships rather than auctions. This helps them negotiate better terms.
• They embrace "complicated" deals: Their research team performs deep-dive checks on complex financial structures. This allows them to price risk effectively and charge higher interest rates.

4. Important: The "Private" Reality

This is not like buying a stock on the New York Stock Exchange.

• No Public Market: You cannot sell your shares instantly. There is no secondary exchange.
• Repurchases: They have a share buyback program, but it is limited to 5% of the fund’s value per quarter. The Board can stop this program at any time. If you sell shares held for less than a year, you pay a 2% penalty that goes back into the fund.
• Fees: You pay an annual management fee of 1.25%. Additionally, there is an incentive fee of 17.5% on profits. This aligns the manager's interests with yours, but it also reduces your total return.

5. The Risks: What You Need to Know

• The "Double Fee" Trap: HPS often uses joint ventures to find deals. You may pay fees to HPS, while the joint venture also charges its own fees. These extra costs can eat into your returns.
• Conflict of Interest: HPS manages over $100 billion across many funds. They often co-invest, meaning your money is tied up alongside others. There is a risk that your fund may get smaller portions of the best deals to satisfy larger, institutional funds.
• Control Issues: Because they use joint ventures, they may share decision-making with partners. This can limit their ability to act quickly if a borrower defaults.
• Clawback Risk: If the fund pays you a dividend and is later found to be insolvent, you could theoretically be asked to return that money to satisfy creditors.
• Valuation: Because these loans don't trade, they are valued using internal models. If these models are too optimistic, your reported account value may be higher than what you would actually receive if the fund were sold off.

6. The Bottom Line

You are relying entirely on the HPS team’s ability to pick good loans. This is a newer fund that hasn't been tested through a long, difficult economic cycle. Between the lack of liquidity, the potential for "double-dipping" on fees, and complex conflicts of interest, this is a "look before you leap" investment. It is only suitable for those with a long-term horizon and a high tolerance for complexity.

Decision Checklist:

• Liquidity: Are you comfortable locking your money away with no guarantee of a quick exit?
• Fees: Have you accounted for the 1.25% management fee and 17.5% incentive fee in your return expectations?
• Complexity: Are you comfortable with the risks associated with internal valuations and joint venture structures?
• Timeline: Is your investment horizon long enough to weather potential economic cycles?