BlackRock seeks one more year to deploy Asia private credit fund
The asset manager seeks more time for APCO II as it moves to deploy about 40% of the portfolio
[SINGAPORE] BlackRock is seeking to extend the investment horizon of its second Asia private credit fund and revise a key clause in the strategy, in the latest sign of complications as it tries to navigate the region’s private markets.
The world’s largest asset manager is proposing a 12-month extension for its Asia-Pacific Private Credit Opportunities Fund II, or APCO II, as it looks to deploy outstanding capital, which is about 40 per cent of the portfolio, according to document sent to investors earlier this week and seen by Bloomberg News. The fund’s investment period expired on Oct 19, the document showed.
The firm is also proposing changes to the “key person” language in the fund’s documents, following the departure of Celia Yan, its former head of Asia-Pacific private credit, earlier this year, the document showed. Edward Tong, managing director of BlackRock’s private financing solutions platform and HPS Investment Partners, is being considered as one of the key people for the fund, it added.
A spokesperson for BlackRock declined to comment.
BlackRock’s move to recycle capital from its APCO II fund comes after it paused fundraising for a planned third Asian private credit strategy earlier this year, following its merger with HPS, Bloomberg News reported earlier. The second vehicle had originally targeted US$1 billion, but raised only around US$435 million.
Also, broader headwinds continue to confront all players vying for a slice of Asia, which remains a small fraction of the US$1.7 trillion global private credit market. Traditional banks remain the dominant providers of credit across the region, accounting for close to 80 per cent of total lending, according to a report from PwC Hong Kong. Meanwhile, deployment in Asia nosedived 67 per cent to US$7.2 billion year-on-year in 2024, the lowest since 2018, according to Preqin data.
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As of the third quarter, APCO II had made 19 investments, nine of which have been repaid, the documents showed. The fund generated gross returns of about 16 per cent, or a net internal rate of return of 13 per cent, the document added.
The revised pool of key people would also include Stephan Caron, Gary Stead, Yue Lu, Simon Chan and Maheshwar Nataraj, the documents showed. Investors have until Dec 3 to grant consent to the proposal.
Meanwhile, Bermuda-based insurer Arch Capital Group – which invested around US$200 million in APCO II and holds stakes in at least 10 BlackRock global funds – is in talks to sell at least US$350 million of its overall stakes, citing underwhelming performance in some and a series of senior departures. BLOOMBERG
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