Dominant in many investment areas, the private capital space is one that BlackRock is not renowned for - but that may start to change.
BlackRock, the world's largest listed asset manager, and its chief executive Laurence Fink, have agreed to invest with private equity firm Gallatin Point Capital. This is seen as a move to increase its involvement in alternative investments, a report said.
The US-based firm has pledged to invest up to $400 million of client money alongside Gallatin’s investments, the Wall Street Journal reported, citing unnamed sources. (Family Wealth Report has contacted BlackRock for comment and may update in due course.)
The business is scheduled to issue third-quarter figures on Oct 16. As of June 30, 2018, BlackRock oversaw $6.3 trillion of assets.
Fink is also investing some of his own money with a fund maintained by the Greenwich, Connecticut-based private-equity firm, founded in 2017 by former BlackRock alternative-investment chief Matt Botein and former US Treasury official Lee Sachs, the WSJ said.
The $400 million pledge BlackRock made on behalf of clients will comprise about one-third of the roughly $1.2 billion raised by Gallatin Point for deals, as the private investment firm seeks stakes in lenders, insurers, financial institutions, and financial assets such as loan pools, the report said.
Renowned for its traditional asset management prowess and involvement in index-tracking funds via its iShares exchange-traded funds brand, the move into private capital markets is a bid to capture a space that it is not so far greatly involved in.
With more than $1.0 trillion of un-called capital in the private equity space - so-called "dry powder" - this part of the alternatives investment space is arguably stretched. The sector has drawn in large inflows at a time of low interest rates and yields on listed stocks, making even illiquid areas such as private equity appear more attractive.
In September BlackRock completed its acquisition of Mexico-based Citibanamex’s asset management business. Citibanamex is a subsidiary of Citigroup. The transaction involved fixed income, equity, and multi-asset funds holding approximately $34 billion in investments.