BlackRock chief executive Larry Fink says the world’s largest asset manager is targeting more “transformational” M&A deals that will expand its technology and private markets capabilities, adding the firm is engaged in more discussions than it has been for “many, many years”.
“Blackrock has been a successful acquirer, and today advancements in tech and AI, scaling of private markets, and more attractive valuations means BlackRock is once again becoming increasingly engaged in M&A discussions,” Fink told analysts on 13 October following its third quarter results.
The US asset manager has a long track record of acquiring rival firms, with two transformational deals including the purchase of Merrill Lynch Investment Management in 2006 Barclays Global Investors in 2009.
More recent deals have included the 2019 acquisition of software provider eFront and the purchase of custom indexing specialist Aperio in 2020.
Its most recent acquisition was that of private debt manager Kreos Capital in June. Fink said he was “challenging the team and myself to think more broadly” about future opportunities.
Over the past five years, BlackRock has spent “about $4bn on M&A”, according to Fink.
“When you look back to when we did big transactions, there was a lot of market unsettlement. There is quite a bit going on now. We are looking at different opportunities related to technology [and] private markets,” said Fink.
“We are engaged in a lot of conversations right now, probably more than we have been in many, many years. We’ll see how this all plays out.”
The comments from the BlackRock chief come as M&A continues to sweep across the asset management sector.
Franklin Templeton announced in May that it would buy rival Putnam Investments for around $925m, adding to a string of recent acquisitions for the US-based asset manager.
The acquisition, which forms part of Franklin’s ambition to grow insurance client assets, comes after it bought alternative credit manager Alcentra from BNY Mellon last year and Legg Mason in 2020.
Meanwhile, UK-based Lansdowne Partners announced earlier this year it would buy Crux Asset Management, while Man Group revealed it would take a controlling stake in Varagon Capital as part of a push into private credit.
According to figures from Refinitiv, 192 deals were struck involving UK fund houses in 2022, the highest number since its records began more than 40 years ago.
Fink’s comments on striking more transformational deals came after BlackRock posted a 13% increase in profit during the third quarter, despite a slowdown in fund flows.
Third-quarter results showed overall net flows of $2.6bn during the three-month period, down from almost $17bn for the same quarter in 2022.
BlackRock’s long-term funds were among the most impacted, with investors pulling a net $13bn. Funds across Europe, the Middle East and Africa were among the worst hit, with investors yanking a net $17bn.
“For the first time in nearly two decades, clients are earning a real return in cash and can wait for more policy and market certainty before re-risking. This dynamic weighed on industry and BlackRock third quarter flows,” said Fink.
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Despite a slowdown in fund flows, revenue of $4.5bn during the third quarter was up 5% on the same period last year, while profit increased to $1.6bn.
BlackRock’s assets under management stood at $9.1tn at the end of September, up from almost $8tn during the same period in 2022.
However, this figure was down from $9.4tn at the end of the second quarter.
BlackRock, which is the world’s largest provider of exchange traded funds, pulled in $29bn in new money across these products, while the attractiveness of cash during a high interest rate environment saw investors plough $15bn into its cash management strategies.
Fixed income funds also pulled in $13bn during the quarter.
“We have seen periods of uncertainty like this before — as recently as 2016 and 2018. Then, as now, BlackRock stayed connected with our clients and across our platform,” added Fink.
“When investors were ready to put money back to work, they came to BlackRock, leading to record flows and share gains.”
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To contact the author of this story with feedback or news, email David Ricketts
