BlackRock Inc. suspended fundraising for its latest Asian private credit strategy fund earlier this year during its merger with HPS Investment Partners, according to sources familiar with the matter. This move adds uncertainty to the company's ambitions to expand private credit asset classes in the Asian region.

Sources requesting anonymity due to private discussions revealed that fundraising for BlackRock's third Asia-Pacific private credit fund stalled in early 2025 after the New York-based company announced its acquisition of private credit firm HPS in December 2024. BlackRock completed the HPS acquisition on July 1st this year.

The fundraising suspension is not the only challenge BlackRock has faced recently. Last month, reports indicated that Arch Capital Group (ACGL), a significant investor in BlackRock's private funds, was in talks to sell at least $350 million worth of fund stakes following underperformance by some funds and departures of multiple executives. Additionally, BlackRock's Asia-Pacific Private Credit Opportunities Fund II has fallen short of fundraising expectations, raising less than half of its $1 billion target.

Sources disclosed in June that BlackRock and Abu Dhabi's sovereign wealth fund Mubadala Investment Co. had agreed to terminate their private credit partnership due to difficulties in finding suitable deal opportunities.

BlackRock's challenges in Asian markets highlight the ongoing difficulties facing the $1.7 trillion global private credit market. According to JPMorgan Chase & Co. data, global private credit fund fundraising had slowed to $70 billion as of July 22nd this year, representing only one-tenth of total alternative asset inflows and marking the lowest proportion since at least 2015. Meanwhile, private credit funds are also grappling with prolonged deal droughts and impacts from U.S. tariff policies.

JPMorgan noted that when including "non-accrual loans" - loans where lenders expect losses - current private credit transaction default rates have reached 5.4%. This level puts private credit default rates roughly on par with the syndicated loan market, raising alarms among some Wall Street observers about underestimated risks in this asset class.

Sources indicated that BlackRock's third Asia-Pacific private credit fund was targeting approximately $1 billion in fundraising, with efforts launched in the fourth quarter of 2023. BlackRock is currently planning internal discussions with HPS executives regarding next steps, though specific timing has not been determined. BlackRock declined to comment on the matter.

The merger between BlackRock and HPS represents one of the major moves by co-founder Larry Fink to strengthen the company's future position in private markets. The asset management firm recently set its first company-wide private markets fundraising target: achieving $400 billion in fundraising by 2030.