Comparable to the layout of "acquisition of iShares"? BlackRock wants to "ETF the private equity market"

Recently, BlackRock, the world's largest asset management company, has successively acquired private equity companies. It seems that it is repeating its successful strategy in the open market 15 years ago. Can it succeed this time?

According to media reports on Monday, looking back on 2009, BlackRock acquired Barclays Global Investment for about $15 billion, including ETF provider iShares. The transaction became a turning point in BlackRock's development, and the ETF business expanded rapidly, which helped BlackRock grow into the world's largest asset management company with assets of $11.5 trillion.

In 2024, BlackRock turned its attention to the private equity market. The company successively acquired GIP for $12.5 billion, HPS Investment Partners for $12 billion, and Preqin, a private equity data provider, for $3.2 billion, totaling nearly $28 billion. In contrast, the cost of acquiring BGI in 2024 was only $22 billion.

Then, will the acquisition of these private equity markets also become another "once-in-a-lifetime" opportunity for BlackRock?

Unlike in 2009, Wall Street is not in the post-crisis recovery period, but private equity is one of the hottest businesses. Although the acquisition cost is high, the management fee of private equity assets is much higher than that of Public Offering of Fund, especially passive ETF. This also explains why the market value of private equity giant KKR ($140 billion) is equivalent to BlackRock's ($162 billion), even though its assets under management are only 1/18 of BlackRock's.

Martin Small, chief financial officer of BlackRock, said:

The company does not pay attention to the short-term benefits of these transactions, but focuses on expanding its capabilities and providing more value to customers. Insurance customers alone represent a market opportunity of 35-40 trillion US dollars.

More importantly, BlackRock hopes to change the investment mode of the private equity market-to "index" private equity. When Larry Fink announced the acquisition of Preqin in July, he said:

Just as the index has become the representative language of the public offering market, we imagine that the principle of indexation, even iShares (BlackRock's ETF brand) can be introduced into the private offering market, which will eventually promote the popularization of all alternative investments.

Risk warning and exemption clause

The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.