BlackRock Private Equity Funds Face Divestment Amid Disappointing Performance

Arch Capital Group, a major investor in BlackRock's private equity funds, is considering reducing its stake due to disappointing performance and executive departures. The company is in talks with secondary funds to sell at least $350 million of its holdings, including a $200 million stake in BlackRock's APCO Fund II. This could further challenge BlackRock, which is already facing difficulties.

Arch Capital Group, a major investor in BlackRock Inc.'s private equity funds, is reportedly considering reducing its stake due to disappointing performance and executive departures. The Bermuda-based insurance firm is in talks with secondary funds to sell at least $350 million of its holdings, including a $200 million stake in BlackRock's APCO Fund II [1].

The decision comes after Arch Capital Group's investments in several BlackRock funds underperformed expectations. The APCO Fund II, for instance, raised less than half its $1 billion target, although it has been generating decent returns. The other three private funds Arch is seeking to exit from have been below expectations [1].

This potential divestment by Arch Capital Group adds to the challenges BlackRock is already facing. Last month, the world's largest asset manager and Abu Dhabi state-owned wealth fund Mubadala Investment Co. mutually agreed to unwind their private credit partnership due to difficulty in sourcing deals [1]. Over the past few months, BlackRock has also witnessed a series of senior departures following the acquisition announcement of private credit firm HPS Investment Partners in December [1].

Among those who have left are David Trucano, a BlackRock executive for a dozen years and investor in the opportunistic credit business, Celia Yan, managing director and head of Asia private credit, Neeraj Seth, head of Asia Pacific fundamental fixed income, Jim Keenan, the global head of BlackRock’s private debt business, and Raj Vig, co-head of US private capital [1].

If Arch Capital Group proceeds with its plan, it would further challenge BlackRock, which is already facing difficulties. The asset manager's ability to attract and retain key talent and successfully manage its funds will be crucial in navigating these challenges.

References:
[1] https://www.bloomberg.com/news/articles/2025-07-24/blackrock-private-funds-face-attempted-exit-by-key-investor-arch