- The business of offering clients nontraditional assets like private equity, hedge funds, and real estate has become a core part of BlackRock’s long-term growth plan.
- Business Insider broke out the 17 most powerful leaders powering the growth within the asset manager’s alternative-investments division, which oversees about $239 billion in assets and has roughly 1,000 employees.
- BlackRock’s top leaders in the business include the head of wealth strategy for the Americas, global head of renewable power, and global head of event-driven investing.
- The firm shook up BlackRock Alternative Investors last year and appointed Edwin Conway, who joined the firm from Blackstone in 2011, to head up the division.
- Visit Business Insider’s homepage for more stories.
BlackRock, the largest asset manager, has expanded its division that offers clients nontraditional assets like private equity and hedge funds in recent years with a new internal structure, newly created positions, and teams of dedicated sales staffers that the alternative-investments business was previously without.
“A key focus area for us is illiquid alternatives,” CEO Larry Fink wrote in a letter to shareholders in March, adding that big-picture shifts like low yields and the “view that alpha is more attainable in private markets” were driving demand.
The New York firm, which reported $7.3 trillion in assets under management at the end of June, oversees $239 billion in its alternatives business around the world.
That’s 3% of the assets BlackRock oversees and accounts for about 9% of the base fees the firm generates. It’s still mammoth, though: By assets under management, the business alone is just larger than KKR and about half the size of Blackstone.
“Five years ago, we were not as recognized as being a participant in the illiquid alternative base, and today we are. We are in the top five in terms of asset growth, and we continue to be driving even more accelerated growth in these areas,” Fink said last month on a call to discuss second-quarter earnings with analysts.
BlackRock has offered alternatives for just about as long as the firm has been around, about three decades. The wider alternatives industry has long been dogged by views that there is a relative lack of transparency into the performance of assets like private equity, and illiquid assets can also come with much higher management fees.
Firms say they are trying to boost transparency around traditionally opaque alternative investments because more clients are demanding it. On Wednesday, the US Securities and Exchange Commission also eased restrictions that prevented most people from investing in private markets.
Read more: Uber-rich investors hungry for growth have turned their sights on the private market. Here’s how wealth firms like Citi and UBS are transforming their businesses to meet those client demands.
Terry Simpson, who oversees wealth strategy for the Americas within the alternatives business and is featured here on our list of key leaders, told Business Insider one of his goals was to make alternative investments “more mainstream” for a retail clientele across wealth firms.
“However, these investors will face the same challenges that institutional investors have historically faced, such as performance dispersion, limited and disparate data, and a lack of tools to take a total portfolio view. Something needs to change,” he said, adding that the firm is focused on addressing those hurdles.
BlackRock’s unit, BlackRock Alternative Investors (BAI), has grown to more than 1,000 employees from about 550 in 2016. The division operates out of 49 global offices, with just over half of those employees in the US.
“Quite frankly, beyond the attractive expected returns or the resilience that people are expecting in down markets, alternatives are playing a critical role in creating a much more holistic portfolio construction approach,” Edwin Conway, the global head of BlackRock Alternative Investors, said in a discussion with a Bank of America analyst in July that was broadcast remotely.
Conway, who joined BlackRock from Blackstone in 2011, was named head of the alternatives business in spring 2019 as part of a wider shake-up to the alternatives business. The structure shifted so it had more than 50 dedicated sales staff reporting to BAI for the first time, beefing up how widely the group could reach clients. Today there are more than 60 such employees.
It also made a giant acquisition within the business. Last year, BAI acquired eFront, a French company that makes software for managing alternative investments, for $1.3 billion in cash.
As the mainstream investment community increasingly embraces alternative investments, and BlackRock eyes an opportunity with the possibility that retirement funds will start incorporating private equity, Business Insider has assembled a comprehensive rundown of the key leaders and executives within the company’s alternative-investments business.
In addition to the heads of business within BAI, we have included other leaders who are tasked with widening the scope of the alternatives business across the firm and bringing its services to a growing variety of clients, like those in the wealth-management industry and institutional customers of the Aladdin business.