After $17.4bn and 25 acquisitions completed, BlackRock’s founder, chairman and CEO Larry Fink recently said his firm is looking for “transformational” opportunities – which begs the question of where the world’s largest manager can look to for its next eureka moment.
“It is through inorganic opportunities that we look at if we can expand our footprint. As I said in my prepared remarks, we are asking ourselves to reimagine BlackRock,” he told analysts on a recent earnings call.
“There is an opportunity for something inorganic and transformational. We are going to be prepared to do something like that but I will just leave it at that.”
It is no secret Fink is not afraid of entirely reshaping his business with major acquisitions, such as the $13.5bn buy-up of Barclays Global investors (BGI) and its iShares brand, which more than doubled BlackRock’s assets under management (AUM) from $1.4trn to $3.3trn and marked a seismic shift to passive investments.
Alongside the firm’s investment management takeovers in BGI, State Street Research & Management in 2005 and Merrill Lynch Investment Managers in 2006, BlackRock has also branched out across investment technologies such as Aladdin, Aperio and eFront, cybersecurity firm Cofense and even energy companies such as Akaysha Energy and Yongxin Energy.
Ahead of Credit Suisse’s recent state-brokered acquisition by UBS, Fink sent a team of BlackRock staff to Zurich after telling them “to be in the game, we must play the game”.
Despite failing to secure a partial acquisition of Credit Suisse’s investment businesses – having previously bought its ETF arm in 2013 – onlookers should not believe BlackRock will simply return to business as usual. Indeed, it took the firm five years to complete the BGI acquisition which has defined its success in recent years.
The firm has also continued to open up new avenues of opportunity, having invested repeatedly in robo-adviser Scalable Capital as it has expanded from Germany to across several European markets as well as partnering with digital platform Bux as it launched ETF savings plans across eight countries.
The asset manager is also at the cutting edge on nascent asset classes. Last year, it partnered with Coinbase to offer its institutional clients access to bitcoin while also launching its own spot bitcoin trust for US clients. Signals this involvement extended in recent months as Fink indicated tokenisation will be “the next generation for securities” before BlackRock’s S&P 500 UCITS ETF became the first ETF to be tokenised by a Swiss firm.
Only this week, BlackRock reminded the market of its influence, becoming the only non-French asset manager in a consortium led by consulting group Adamantia to submit a bid to establish a real-time, pre and post-trade equity and ETF consolidated tape in line with the demands of the buy and sell-side communities.
Whether in fund management, retail or crypto expansion or even influencing the structure of capital markets, BlackRock will continue to dominate by virtue of its scale and the power of its brand. Only time will tell where Fink’s behemoth will next make its immodest presence known.
One umbrella for listed and unlisted share classes
This week, HSBC Asset Management became the first asset manager to offer ETF and unlisted fund share classes within the same Irish-domiciled fund structure, with plans to rename four fixed income index funds to UCITS ETFs on 18 May.
The move will see the firm enter the top 10 largest bond ETF issuers in Europe, adding $6bn assets under management (AUM) to its suite after the funds have been renamed ETFs, in line with Central Bank of Ireland (CBI) requirements.
HSBC AM’s decision to launch an ETF share class is significant given Ireland already houses 67% of Europe’s ETF AUM. It is unknown whether this will become a subject of regulatory scrutiny or the start of a landslide of conversions into wrapped exposure in Europe.
A discussion to define the future of Europe’s capital markets
This week marked the beginning of the trialogue process between EU political chambers to discuss and define a guiding framework for a consolidated tape across the European bloc.
Debates around which vision of the tape would be optimal have gathered volume since a consortium of exchanges expressed their desire to bid to operate the infrastructure in February, before composing an open letter in support of the European Council’s proposals last week.
Only days later, industry body EFAMA sent a contravening letter co-signed by 18 asset managers including Legal & General, Invesco and Baillie Gifford.
Susan Yavari, senior regulatory policy adviser at EFAMA, stressed the importance of the inclusion of real-time pre-trade data in the tape if Europe is to reverse the 25% decrease in trading volumes over the past decade. Failing to include such data would only “slam the door today on an ambitious tape and we only widen the gap with the US”, she said.
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