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BlackRock (BLK) to Buy Preqin, Boost Private Markets Abilities
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BlackRock (BLK - Free Report) has announced a deal to acquire Preqin, a premier provider of private markets data, for almost $3.2 billion (£2.55 billion) in cash. This acquisition marks a significant milestone in the company’s strategy to enhance its private markets capabilities by integrating investments, technology and data across the entire portfolio.
The integration of London-based Preqin’s extensive data and research tools with BlackRock’s Aladdin platform will create an unmatched private markets technology and data provider. By bringing together Preqin's capabilities with Aladdin’s workflow functionalities, BLK aims to deliver a comprehensive solution for fund managers and investors. The move is expected to enhance transparency and access in private markets as well as streamline investment processes.
By bridging the transparency gap between public and private markets, BlackRock aims to deliver superior data and analytics capabilities, empowering clients to make more informed investment decisions. The transaction, expected to close by year-end, is still subject to regulatory approvals and customary closing conditions.
Upon closure, Preqin founder Mark O’Hare will join BlackRock as a vice chair.
Aladdin's Strategic Expansion
The buyout represents a strategic expansion of BlackRock’s Aladdin technology business into the rapidly growing private markets data segment. This segment, which includes private equity, real estate, infrastructure and hedge funds, is projected to reach a total addressable market of $8 billion.
The sector is growing at an annual rate of 12% and is expected to touch $18 billion by 2030. By tapping into this market, BlackRock aims to unlock significant growth potential and provide unparalleled data and analytics solutions to its clients.
Preqin’s Client Base and Recurring Revenue to Aid
Preqin brings a substantial client base to BlackRock, including more than 4,000 relationships with general partners, limited partners and service providers. This diverse clientele will significantly enhance the company’s market reach and client engagement.
Additionally, Preqin is expected to generate approximately $240 million in highly recurring revenue in 2024, reflecting a solid growth trajectory of around 20% annually over the past three years.
Private Markets Presence to Benefit
Private markets represent the fastest-growing segment in asset management, with alternative assets anticipated to hit $40 trillion by the decade’s end. As institutional and wealth investors increasingly allocate funds to alternatives, there is a rising demand for standardized data, benchmarks and analytics.
These tools are essential for effectively incorporating private asset classes into portfolios and optimizing fund manager performance. The acquisition of Preqin will fortify BlackRock’s position in this burgeoning market, enhancing its ability to meet client demands and drive superior investment outcomes.
Strengthening Financials
The Preqin acquisition is expected to significantly boost BlackRock’s financial performance. The highly recurring revenue from Preqin will provide a stable and growing income stream, enhancing overall profitability. Furthermore, the expanded client base and enhanced technological capabilities will position BlackRock as a leader in the private markets data segment, driving long-term growth and shareholder value.
The deal is expected to be slightly dilutive to BlackRock’s adjusted earnings and operating margin in 2024, excluding one-time transaction charges. The company noted that the value creation potential of identified synergies is projected to result in an estimated IRR of almost 18%, well above the cost of capital.
BlackRock has been actively pursuing other global and domestic expansion opportunities. In May 2024, the company acquired the remaining 75% stake in SpiderRock (this will enhance its separately managed accounts offerings). In January 2024, BlackRock agreed to acquire Global Infrastructure Partners for $12.5 billion, which will significantly expand its offerings beyond traditional stocks and bonds.
In 2023, the company acquired London-based Kreos Capital and agreed to form a joint venture with Jio Financial Services Limited, named Jio BlackRock. These strategic moves align with the company’s vision of providing comprehensive investment solutions across diverse asset classes and geographies.
Over the past year, shares of BlackRock have gained 13.5%, underperforming the industry’s rally of 26.3%.
Other Financial Services Firms Taking Similar Steps
Blue Owl Capital Inc. (OWL - Free Report) completed the acquisition of Prima Capital Advisors from funds managed by Stone Point Capital LLC. The move aims to boost the company’s presence in the real estate market and further diversify its offerings on the platform.
The deal, announced in April 2024, also led to the formation of Blue Owl’s Real Estate Finance strategy. Per the terms of the transaction, the company paid roughly $157 million in equity and $13 million in cash. An additional earnout of up to $35 million will be paid in the form of equity upon the fulfillment of certain targets. Prima’s employees will be joining Blue Owl.
Piper Sandler (PIPR - Free Report) announced a definitive agreement to buy Aviditi Advisors, an alternative investment bank. The acquisition will enhance the company’s capabilities in fundraising, secondary solutions and direct investment capital. Thus, it will further solidify PIPR’s leadership position in the private equity M&A and capital markets sectors.
Following the completion of the acquisition (expected in the third quarter of 2024), Aviditi will form Piper Sandler’s private capital advisory group. This will, thereby, expand PIPR’s investment banking platform.
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BlackRock (BLK) to Buy Preqin, Boost Private Markets Abilities
BlackRock (BLK - Free Report) has announced a deal to acquire Preqin, a premier provider of private markets data, for almost $3.2 billion (£2.55 billion) in cash. This acquisition marks a significant milestone in the company’s strategy to enhance its private markets capabilities by integrating investments, technology and data across the entire portfolio.
The integration of London-based Preqin’s extensive data and research tools with BlackRock’s Aladdin platform will create an unmatched private markets technology and data provider. By bringing together Preqin's capabilities with Aladdin’s workflow functionalities, BLK aims to deliver a comprehensive solution for fund managers and investors. The move is expected to enhance transparency and access in private markets as well as streamline investment processes.
By bridging the transparency gap between public and private markets, BlackRock aims to deliver superior data and analytics capabilities, empowering clients to make more informed investment decisions. The transaction, expected to close by year-end, is still subject to regulatory approvals and customary closing conditions.
Upon closure, Preqin founder Mark O’Hare will join BlackRock as a vice chair.
Aladdin's Strategic Expansion
The buyout represents a strategic expansion of BlackRock’s Aladdin technology business into the rapidly growing private markets data segment. This segment, which includes private equity, real estate, infrastructure and hedge funds, is projected to reach a total addressable market of $8 billion.
The sector is growing at an annual rate of 12% and is expected to touch $18 billion by 2030. By tapping into this market, BlackRock aims to unlock significant growth potential and provide unparalleled data and analytics solutions to its clients.
Preqin’s Client Base and Recurring Revenue to Aid
Preqin brings a substantial client base to BlackRock, including more than 4,000 relationships with general partners, limited partners and service providers. This diverse clientele will significantly enhance the company’s market reach and client engagement.
Additionally, Preqin is expected to generate approximately $240 million in highly recurring revenue in 2024, reflecting a solid growth trajectory of around 20% annually over the past three years.
Private Markets Presence to Benefit
Private markets represent the fastest-growing segment in asset management, with alternative assets anticipated to hit $40 trillion by the decade’s end. As institutional and wealth investors increasingly allocate funds to alternatives, there is a rising demand for standardized data, benchmarks and analytics.
These tools are essential for effectively incorporating private asset classes into portfolios and optimizing fund manager performance. The acquisition of Preqin will fortify BlackRock’s position in this burgeoning market, enhancing its ability to meet client demands and drive superior investment outcomes.
Strengthening Financials
The Preqin acquisition is expected to significantly boost BlackRock’s financial performance. The highly recurring revenue from Preqin will provide a stable and growing income stream, enhancing overall profitability. Furthermore, the expanded client base and enhanced technological capabilities will position BlackRock as a leader in the private markets data segment, driving long-term growth and shareholder value.
The deal is expected to be slightly dilutive to BlackRock’s adjusted earnings and operating margin in 2024, excluding one-time transaction charges. The company noted that the value creation potential of identified synergies is projected to result in an estimated IRR of almost 18%, well above the cost of capital.
BlackRock has been actively pursuing other global and domestic expansion opportunities. In May 2024, the company acquired the remaining 75% stake in SpiderRock (this will enhance its separately managed accounts offerings). In January 2024, BlackRock agreed to acquire Global Infrastructure Partners for $12.5 billion, which will significantly expand its offerings beyond traditional stocks and bonds.
In 2023, the company acquired London-based Kreos Capital and agreed to form a joint venture with Jio Financial Services Limited, named Jio BlackRock. These strategic moves align with the company’s vision of providing comprehensive investment solutions across diverse asset classes and geographies.
Over the past year, shares of BlackRock have gained 13.5%, underperforming the industry’s rally of 26.3%.
Image Source: Zacks Investment Research
Currently, BLK carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Financial Services Firms Taking Similar Steps
Blue Owl Capital Inc. (OWL - Free Report) completed the acquisition of Prima Capital Advisors from funds managed by Stone Point Capital LLC. The move aims to boost the company’s presence in the real estate market and further diversify its offerings on the platform.
The deal, announced in April 2024, also led to the formation of Blue Owl’s Real Estate Finance strategy. Per the terms of the transaction, the company paid roughly $157 million in equity and $13 million in cash. An additional earnout of up to $35 million will be paid in the form of equity upon the fulfillment of certain targets. Prima’s employees will be joining Blue Owl.
Piper Sandler (PIPR - Free Report) announced a definitive agreement to buy Aviditi Advisors, an alternative investment bank. The acquisition will enhance the company’s capabilities in fundraising, secondary solutions and direct investment capital. Thus, it will further solidify PIPR’s leadership position in the private equity M&A and capital markets sectors.
Following the completion of the acquisition (expected in the third quarter of 2024), Aviditi will form Piper Sandler’s private capital advisory group. This will, thereby, expand PIPR’s investment banking platform.