BlackRock plans private market hires to win over rich Europeans
[LONDON] BlackRock is ramping up plans to offer more of its private-market products to individuals outside the US as the Wall Street giant increasingly tries to muscle in on one of the hottest areas in global finance.
The world's largest asset manager is targeting a hiring drive and tie-ups with digital investment platforms in the Europe, Middle East and Africa region to boost individual investors' access to its private-markets products, BlackRock executive Fabio Osta said in an interview.
'We'll continue expanding,' said Osta, head of BlackRock's alternative-specialists team for its EMEA wealth unit, declining to specify recruiting targets. 'We want more people in private markets.'
BlackRock, a pioneer in providing low-cost stock and bond funds, is betting it can conquer a more opaque and exclusive part of finance by homing in on private markets, where longtime leveraged-buyout titans such as Blackstone and KKR traditionally dominate.
The New York-based firm has committed about US$28 billion over the past year or so for acquiring private-asset firms to elbow in on the space, fuelled by chief executive officer Larry Fink's bet that the traditional 60-40 split of stocks and bonds no longer cuts it for model investment portfolios.
It has also cut its minimum investment levels to 10,000 euros (S$14,688) following regulatory changes last year that make it easier for individuals to access private markets from Europe, where some wealthy investors previously had no allocations to private credit or infrastructure assets. Customers of digital investment platform Scalable Capital in Germany, Austria and Italy can now use its smartphone app to access BlackRock's evergreen private equity fund launched last year – and more may follow.
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'We are actively engaging with key players in the industry around this very topic,' Osta, a 12-year BlackRock veteran, said in the interview at the US firm's London office. Smartphones are 'the platform that you want to tap into to deliver private markets at scale.'
In recent months, BlackRock for the first time began rolling out model portfolios to retail wealth clients in the US that include private equity and credit funds. The company, which oversaw US$11.6 trillion in assets under management at the end of March, is also completing the acquisition of New York-based private credit firm HPS Investment Partners, after earlier buying US investment firm Global Infrastructure Partners.
Over the next decade, private-market assets under management are expected to reach as much as US$65 trillion, more than tripling since the end of 2012, according to recent research from Bain. In the meantime, individual investors have a lot of catching up to do: At BlackRock's inaugural EMEA private markets wealth summit in London in March, a survey of 70 advisers to well-heeled individuals found that most of their clients had 5 per cent or less of their portfolios in non-listed assets.
If Fink and his colleagues have their way, that figure will eventually rise to at least 20 per cent, helping to forge a new era for both BlackRock and how individual investors manage their money.
'It's a different game to operate in this space,' Osta said on the private wealth sector. 'It's important we remain students of the market to help guide our clients on this journey.' BLOOMBERG
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