The world’s leading asset management firm, BlackRock, has embarked on a substantial acquisition campaign that promises to redefine its structure. Last year, BlackRock publicized a series of notable acquisitions, including a $12 billion agreement to acquire private credit manager HPS Investment Partners (anticipated to conclude in mid-2025), a $12.5 billion deal to acquire infrastructure investment company Global Infrastructure Partners (finalized in October), and a $3.2 billion contract to purchase alternative assets data provider Preqin (anticipated to join this quarter).
These acquisitions mark a significant shift in BlackRock’s operational strategy and market positioning, as highlighted by Martin Small, BlackRock’s CFO, at the recent Bank of America financial services conference. These deals coincide with a period of stiff competition for BlackRock’s portfolio of exchange-traded funds (ETFs) and other funds, underscored by Vanguard’s recent announcement of fee reductions for nearly 100 of its funds.
Despite a subsequent dip in BlackRock’s stock, the firm remains confident in its financial stability. The new acquisitions are expected to aid BlackRock in amassing more assets and strengthening earnings, potentially leading to a higher price-to-earnings multiple for the company’s stock.
Each acquisition brings its own benefits to BlackRock. The HPS deal will add $148 billion in assets to BlackRock’s existing $89 billion private debt platform, expanding its foothold in the profitable private credit market. Meanwhile, acquiring GIP, the world’s largest independent infrastructure fund manager, will increase BlackRock’s infrastructure assets significantly. Lastly, bringing Preqin into the fold will enhance BlackRock’s existing Aladdin portfolio management platform, providing clients with more insights into the world of alternative assets.
These acquisitions are a testament to BlackRock’s adaptability and foresight in catering to the evolving needs of its clients and the financial markets. However, for the time being, no other major acquisitions are planned. BlackRock’s current focus is on expanding its footprint in the alternative assets, private markets, and technology sectors, which promise more stable earnings and greater diversification.
