BlackRock’s deal spree bestows fortunes across Wall Street>
A little more than a year ago, BlackRock founder Larry Fink telegraphed to Wall Street that the world’s largest asset manager was on the hunt for “transformational” deals.
Twelve months on, he has delivered. The asset manager has struck deals worth nearly $30bn this year, reshaping Wall Street and putting BlackRock in direct competition with a new set of powerful rivals.
On Tuesday, the asset manager clinched its latest target: the $12bn acquisition of credit investing powerhouse HPS Investment Partners.
The push has moulded BlackRock — best known for passive equity and debt index products that spurred the demise of scores of traditional active asset management groups — into a new force in private capital.
It’s now in direct competition with Blackstone, Apollo, KKR and Brookfield.
The year of dealmaking started in January, when Fink agreed to buy private investment firm Global Infrastructure Partners. In July, BlackRock paid £2.55bn to acquire private capital data provider Preqin.
Both HPS and GIP are giants, each managing more than $100bn. The acquisitions give BlackRock more than $600bn in private capital assets and the private market data to create new indices.
Fink’s deal spree has also showered enormous wealth across Wall Street.
BlackRock paid $12.5bn in cash and stock to buy GIP, making its founders the asset manager’s second-largest shareholders. Co-founder Adebayo Ogunlesi enjoyed a multibillion-dollar windfall, and he joined BlackRock’s board of directors.
HPS initially planned to go public, but found a hungry potential buyer in BlackRock instead. While HPS’s co-founders — Scott Kapnick, Scot French and Michael Patterson — tried to reach the windfall that GIP’s partners had won months earlier, they came up slightly short.
The HPS acquisition price is a notch below that of GIP and comes with no cash, relying entirely on BlackRock’s stock. The GIP deal was also struck before a 30 per cent run in BlackRock’s shares this year, which has in effect pushed the takeover value towards $15bn.
But HPS is also in line for an additional 1.6mn shares if it meets certain targets within five years of the deal closing, a consideration worth $1.6bn at today’s levels. Add in the $400mn of HPS debt BlackRock may retire, and the total price inches up to roughly $14.4bn.
Advisers to BlackRock have also fared well. Robert Steel at Perella Weinberg, a close friend of Fink and vice-chair of the investment bank, had advisory roles in all three deals.
DD would note that perhaps the biggest winner of all is Mark O’Hare, founder and majority owner of Preqin. The data provider sold for cash, almost all of which went into O’Hare’s pocket, instantly making the former BCG consultant among Britain’s wealthiest people.