Yahoo Finance BlackRock’s Fink: Buying Preqin unlocks 'democratization of all alternatives'
BlackRock (BLK) CEO Larry Fink made it clear Monday that his firm’s acquisition of London data provider Preqin is part of a much larger vision he has to make private markets a lot more investable.
"We anticipate indexes and data will be important to future drivers of the democratization of all alternatives," Fink said on a Monday morning conference call. "And this acquisition is the unlock."
BlackRock and other asset management firms are making an aggressive expansion into private markets as the financial world pushes deeper into alternative assets that aren’t publicly traded.
These assets include everything from private equity and credit to real estate, infrastructure projects, and even ownership of music rights.
For BlackRock, the world’s largest money manager, Preqin is the fourth acquisition of an alternative asset firm in the last five years.
Preqin tracks the private markets for clients, providing data about funds and investors. Its revenue is up 20% over the last three years.
Preqin valued the market for all private assets at $16 trillion last year, and it expects this market to more than double to $39 trillion over the next six years.
The challenge for the market is that these assets are not as readily priced as publicly traded stocks or bonds and data is still relatively opaque, making them a more challenging sell to some investors. The lack of transparency within alternatives has also made some regulators leery.
Fink said BlackRock, which is perhaps best known for its index funds that track stock exchanges, aims to do for private markets what index funds have done for public markets.
"Think about how data, benchmarks, and risk analytics transform public markets,” he said on a conference call. "They make markets more accessible from the developed to the emerging from stocks to bonds. They made investment performance and drivers of return much more transparent.”
BlackRock’s goal, he added, "is to do all of that in the far less mature data analytics and index business for all the private markets."
In short, "we believe we could index to private markets."
BlackRock’s stock was down slightly in Monday’s trading. Year to date, the money manager’s stock has fallen 3%.
BlackRock expects to fund the Preqin transaction through up to $3 billion in additional debt and close before year-end, subject to regulatory approvals. It also expects the deal will bring an added $240 million to its 2024 revenue.
BlackRock plans to integrate Preqin's analytics within its own institutional investor platform, Aladdin. The company said it will also continue to offer Preqin as a stand-alone data provider.
It is the company’s second big acquisition in the alternatives space this year. In January it unveiled plans to buy private equity firm Global Infrastructure Partners for about $12.5 billion.
"Private markets are the fastest growing segment of asset management, and we see significant demand from our clients to do more in this space," Fink said Monday.
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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