BlackRock is asking investors to approve a 12-month extension for its Asia Pacific Private Credit Opportunities Fund II, as the firm attempts to deploy the roughly 40% of capital that remains undrawn after the fund’s investment period expired on 19 October, Bloomberg reports.

The proposal also includes amendments to the fund’s key person clause following the departure of Celia Yan, the firm’s former head of Asia Pacific private credit. BlackRock is considering several replacements, including Edward Tong, along with Stephan Caron, Gary Stead, Yue Lu, Simon Chan, and Maheshwar Nataraj. Investors have until 3 December to grant consent.

The request comes after BlackRock paused fundraising for a planned third Asia private credit strategy earlier this year following its merger with HPS. APCO II originally targeted $1bn but closed at about $435m. The firm is now seeking to recycle capital from the second fund as private credit deployment across Asia continues to slow.

Traditional banks dominate lending in the region, accounting for nearly 80% of total credit. Asia remains a small part of the $1.7tn global private credit market, and deployment fell 67% to $7.2bn in 2024, the lowest level since 2018, according to Preqin and PwC Hong Kong data.

As of the third quarter, APCO II had made 19 investments, nine of which have been repaid. The fund has generated gross returns of about 16%, equivalent to a net IRR of 13%.

Meanwhile, Arch Capital Group, a Bermuda insurer that invested about $200m in APCO II and holds stakes in at least 10 BlackRock funds, is in talks to sell at least $350m of its positions, citing underwhelming performance in some strategies and multiple senior departures.

BlackRock declined to comment on the proposals.

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