BlackRock, Inc. (BLK) is all set to acquire Swiss Re Private Equity Partners (:SRPEP) AG, the private equity operations arm of the fund management group Swiss Re Ltd. BlackRock and Swiss Re have made agreements to divert the latter’s investments in SRPEP to BlackRock Alternative Investors (:BAI).
This all-cash deal is expected to be completed sometime around September 2012. The concerned parties have not yet disclosed the financial terms of the deal. The acquisition will merge SRPEP into BlackRock Private Equity Partners (:BRPEP).
This merger will bring BRPEP’s funding to approximately $15 billion. The agreement will improve its product line-up and human resources as well. Upon acquisition, the fund is aiming at exploring the investment opportunities in primary and secondary funds along with direct co-investments through core fund of funds.
Earlier, there were several M&A deals in the alternative investment solutions industry, pointing to a change in attitude of small insurers and financial institutions. These institutions and insurers are no longer willing to keep risky assets in their portfolio in the wake of the changing regulatory backdrop.
As a result, bigger companies are getting hold of such assets and are consolidating their position. This would eliminate competition and increase the market share of these companies, thereby resulting in increased profitability.
Earlier Deals by BlackRock
Earlier this year, BlackRock purchased Canada-based Claymore Investments. The deal supplemented $7.3 billion of assets under management, mostly in equity and fixed income and resulted in the addition of 38 exchange traded funds (ETFs) to its iShares brand.
In 2010, the company had acquired Helix Financial Group LLC, a North Carolina-based company. This acquisition expanded the commercial real estate capabilities of BlackRock including its Financial Markets Advisory Group practice.
The acquisition of Barclays Global Investors (:BGI), a wing of Barclays PLC (BCS), in 2009 remains one of the significant deals in BlackRock’s history. The company agreed to purchase BGI, providing it with $3.1 trillion as assets, and its exchange-traded-fund business, iShares.
The cash-and-stock deal, which was prized at $13.5 billion, created the world’s largest asset management company of that period. At the end of 2009, BlackRock had $3.4 trillion in assets under management compared with $1.3 trillion at 2008-end.
BlackRock’s purchase of Swiss Re affiliate seems to work in its favor. The agreement will expand BlackRock’s global footprint as well as will provide the company with a plethora of diversified assets. Further, the company is about to hire a set of well-trained personnel for executing business opportunities more efficiently.
Currently, shares of BlackRock retain a Zacks #3 Rank, which translates into a short-term Hold rating.
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