Now this is the kind of coal you want in your stocking. BlackRock, with more than $3.5 trillion under management, is the world's largest money manager. The firm specializes in equity and fixed income products, as well as alternative and multi-class instruments, which it invests in on behalf of institutional and retail investors worldwide; it does not engage in proprietary trading. Clients include pension plans, governments, insurance companies, mutual funds, endowments, foundations, and charities. BlackRock also provides risk management services through BlackRock Solutions and is a leading provider of exchange-traded funds (ETFs) through iShares. BlackRock has offices in some 25 countries.
CEO Laurence Fink, who has overseen a string of major acquisitions in recent years, engineered a blockbuster merger with Barclays Global Investors (BGI) in 2009. In the deal, which was several years in the making, BlackRock bought Barclays Global Investors from UK banking giant Barclays for some $15 billion. The deal resulted in a new company operating under the BlackRock name. Barclays Bank retained a 20% stake in the combined firm, but Fink remained in charge of the enterprise.
The merger nearly tripled BlackRock's assets under management and propelled the company to the top of the international money management industry by enhancing its investment and risk management capabilities. The deal also gave BlackRock a much larger footprint outside the US and added more than 3,500 new employees. Revenues nearly doubled in the year after the merger.
Growth continued in 2011, when the company reported $9.1 billion in revenues (a rise of 5%) and net income of $2.3 billion (a rise of 13%). BlackRock has benefitted from unrest in the global markets, as clients move their funds into more passive investments like equity and fixed income assets.
Even prior to the Barclays Global deal, BlackRock was growing rapidly through acquisitions, gobbling up smaller firms and other opportunities in the marketplace. The growth has continued, albeit on a smaller scale, post-merger. In 2012 BlackRock expanded in Canada through the acquisition of fund manager Claymore Investments. Also that year, the company agreed to buy Swiss Re Private Equity Partners, the European private equity and infrastructure fund of funds business of Swiss Re, which will expand its own private equity fund of funds group into infrastructure investing as well as broadening its presence in Europe and Asia.
Stateside, BlackRock acquired most of the assets of South Carolina-based Helix Financial Group in 2010. The deal enhanced BlackRock's real estate analytics capabilities, in addition to adding offices and personnel in the US and India. BlackRock also oversees the operations of publicly traded real estate investment trust Anthracite Capital.
The company has amassed quite an impressive portfolio of holdings and is often the largest shareholder of entities it invests in (including General Electric, Exxon Mobil, and BP.) BlackRock traditionally focused investments on developed economies, but the company has broadened its sights to include emerging markets in Asia, the Middle East, and Latin America. The firm plans to expand its client base further, to the point where it does more than half of its business outside the US. (Approximately 44% of its client assets under management come from outside the US.)
BlackRock Realty partnered with Tishman Speyer to buy Stuyvesant Town-Peter Cooper Village in New York City from Met Life for $5.4 billion in 2006. The deal was one of the largest in US history but proved unfortunate in the wake of the real estate and credit market crashes. In 2010, BlackRock and Tishman Speyer defaulted on the $4.4 billion debt used to finance the transaction and the property was handed over to creditors.
Bank of America gained a 34% stake in BlackRock when it acquired Merrill Lynch (and its BlackRock holdings) in 2009. The bank reduced its stake in BlackRock to less than 10% in 2010, and announced plans to sell the remainder of its holdings to the company for more than $2.5 billion the following year. PNC Financial Services Group is the company's largest shareholder, owning 24% of its voting common shares. – less