BlackRock Halts Asia Private Credit Fund Fundraising Amid Strategic Shifts
BlackRock has suspended fundraising for its third Asia-Pacific private credit fund, which targeted $1 billion. This decision follows the acquisition of HPS Investment Partners. The company faces challenges in the region, including investor concerns, underperformance of previous funds, and the dissolution of a partnership with Mubadala Investment Co. The broader private credit market is experiencing a slowdown, with fundraising decelerating to $70 billion through July 22. Despite these challenges, BlackRock maintains a target of $400 billion in private market fundraising by 2030.
*this image is generated using AI for illustrative purposes only.
BlackRock Inc., the world's largest asset manager, has made a significant move in its Asia-Pacific private credit strategy, pausing fundraising for its third fund in the region. This decision comes on the heels of the company's acquisition of HPS Investment Partners, which was finalized on July 1.
Fund Fundraising Suspended
The third Asia-Pacific private credit fund, which had set an ambitious target of $1 billion, began its fundraising efforts in the fourth quarter of 2023. However, the recent acquisition of HPS Investment Partners has prompted BlackRock to reassess its strategy in this space.
Challenges in the Asia-Pacific Region
BlackRock's decision to halt fundraising is not isolated from other challenges it faces in the Asia-Pacific market:
Investor Concerns: Key investor Arch Capital Group is reportedly in talks to divest at least $350 million in stakes, citing disappointing performance and senior departures as primary concerns.
Previous Fund Performance: The company's second Asia-Pacific private credit fund fell short of expectations, securing less than half of its $1 billion target.
Partnership Dissolution: BlackRock and Mubadala Investment Co. have unwound their private credit partnership, attributing the decision to difficulties in sourcing deals.
Broader Market Context
The private credit market as a whole is experiencing a slowdown:
- Fundraising has decelerated to $70 billion through July 22, representing only a tenth of alternative asset inflows.
- Default rates for private credit deals stand at 5.40% when including non-accrual loans.
BlackRock's Long-term Vision
Despite these challenges, BlackRock maintains an ambitious outlook for its private markets business:
- The firm has set a firmwide target of $400 billion in private market fundraising by 2030.
Looking Ahead
As BlackRock navigates these strategic shifts and market challenges, the asset management industry will be watching closely to see how the company adapts its approach to private credit, particularly in the Asia-Pacific region. The pause in fundraising for the third Asia-Pacific private credit fund may provide BlackRock with an opportunity to reassess and potentially realign its strategy in this important market segment.
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