(Bloomberg) - A key investor in BlackRock Inc.’s private funds is looking to cut its stakes following disappointing performance and senior executive departures at the US asset manager, according to people familiar with the matter.
Bermuda-based insurance firm Arch Capital Group, which has holdings in at least ten BlackRock funds, is in talks to sell at least $350 million of stakes to secondary funds including Ares Management Corp., one of the people said, asking not to be identified discussing a private matter.
The portfolio includes Arch’s $200 million investment in BlackRock’s APCO Fund II, which raised less than half its $1 billion fund target, the people said. Although the APCO Fund II has been generating decent returns, the other three private funds that Arch is seeking to exit from have been below expectations, one of the people said.
If Arch proceeds with the plan, it would add to the headwinds recently faced by the world’s largest asset manager. Last month, BlackRock and Abu Dhabi state-owned wealth fund Mubadala Investment Co. mutually agreed to unwind their private credit partnership due to difficulty in sourcing deals, Bloomberg News reported.
Arch, Ares and BlackRock declined to comment.
Over the last few months, BlackRock also witnessed a series of senior departures following the acquisition announcement of private credit firm HPS Investment Partners in December, which has further eroded Arch’s confidence in the future performance of the managed funds, the people said. The firm completed its acquisition of HPS on July 1.
Among the people who have left include David Trucano, a BlackRock executive for a dozen years and investor in the opportunistic credit business, and Celia Yan, managing director and head of Asia private credit, Bloomberg News reported earlier. Neeraj Seth, head of Asia Pacific fundamental fixed income, departed the firm in February after 16 years there, according to his LinkedIn profile.
Jim Keenan, the global head of BlackRock’s private debt business and a two-decade company veteran, left in May, while Raj Vig, co-head of US private capital departed in February, according to their LinkedIn profiles. Keenan and Vig’s departures were announced last year when the firm sought to overhaul its private credit business as it races to catch up with competitors in the booming market.
By Megawati Wijaya and Trista Xinyi Luo
