BlackRock Inc. has paused fundraising for its third Asia-Pacific private credit fund as it integrates its recent acquisition of HPS Investment Partners, adding uncertainty to its ambitions in the region’s fast-growing private credit market.
According to Bloomberg, BlackRock had been targeting roughly $1 billion for the fund, with fundraising initially launched in the fourth quarter of 2023. Sources familiar with the matter said internal discussions with HPS executives on how to proceed are expected but it remains unclear when those talks will take place. BlackRock declined to comment.
The move comes amid a series of challenges for BlackRock’s private credit operations. Arch Capital Group, a key investor in several of its private funds, is reportedly in discussions to sell at least $350 million of stakes following disappointing performance and senior departures. Meanwhile, the Asia-Pacific Private Credit Opportunities Fund II had raised less than half of its $1 billion target prior to the pause.
Compounding the difficulties, BlackRock and Mubadala Investment Co., the Abu Dhabi state-owned wealth fund, recently mutually agreed to unwind their private credit partnership, citing difficulties in sourcing deals. The episode highlights structural hurdles in Asia’s private credit market, including regulatory complexity and limited deal flow, even for top-tier managers.
The HPS merger is part of a broader strategy by BlackRock co-founder Larry Fink to cement the firm’s future in private markets. As part of this push, BlackRock recently set its first-ever firmwide target for private market fundraising at $400 billion by 2030. Analysts say the acquisition positions BlackRock to expand its lending capabilities and capture growth outside traditional public markets, but integrating two large operations in a complex region will be closely watched by investors.
Private credit, which involves lending by non-bank institutions, has grown rapidly as global investors seek higher yields outside traditional fixed income. BlackRock had positioned its Asia-Pacific strategy as a key growth driver, but the combination of investor pullbacks, fundraising delays, and the HPS integration has cast a shadow over its near-term prospects.
Despite these challenges, BlackRock remains the world’s largest asset manager, overseeing more than $10 trillion in assets. The firm has emphasized the strategic importance of private markets for its long-term growth, but execution risks remain significant as it navigates a competitive and evolving Asia-Pacific landscape.
