BlackRock has secured more than $800 million in initial commitments toward its $1 billion target for the BlackRock Impact Opportunities Fund. This new fund, the first multi-alternatives strategy of its kind, is already beginning to invest in businesses and projects owned, led by, or serving people of color, with a particular focus on Black, Latinx and Native American communities in the United States.
Edwin Conway, global head of BlackRock Alternative Investors, commented, “Black, Latinx and Native American people face a number of systemic barriers in accessing the market and acquiring the capital necessary to drive economic growth and wealth creation in their communities. The BlackRock Impact Opportunities Fund aspires to change the way institutional capital flows to communities of color, and is just one step BlackRock is taking with our clients and partners to address this significant investment opportunity.”
Launched in 2021, this return-seeking fund looks to uncover compelling investment opportunities in undercapitalized companies and communities that are poised for growth. It takes a novel approach to social impact by making direct investments across private equity, private credit, infrastructure, real estate and other niche asset classes — using a wide range of tools seeking to create collective wealth for the businesses and communities in which it invests, and to generate returns for the fund’s investors. The BlackRock Impact Opportunities Fund’s investments focus on themes such as housing, financial inclusion, education, healthcare, inclusive transition and digital connectivity. To date, a broad investor base including leading corporations, pension funds, insurers, endowments, foundations and family offices have committed to the debut fund.
The fund is led by a dedicated and experienced team of diverse portfolio managers that leverages BlackRock Alternative Investors’ $330 billion private markets platform, as well as the convening power of BlackRock, to source and execute investment opportunities.
Pam Chan, chief investment officer and global head of BlackRock’s Alternative Solutions Group, commented, “To create collective wealth for these communities and our clients, we combine our singular impact objective — to improve economic outcomes for undercapitalized communities of color — with a flexible, multi-alternative investment approach. In doing so, we seek to deliver differentiated returns alongside impact and show that investors can do well and do good.”
To date, the fund has evaluated a robust pipeline of opportunities and completed three investments:
– In May 2022, the fund partnered with Eastwood Capital Partners, a Black-owned sponsor, and Retro Fitness to invest in the development of up to 70 fitness franchises in the Dallas, Houston and Southeast Florida areas. The investment seeks to make affordable exercise, health and fitness more accessible to communities of color to help address disparities in social determinants of health. Moreover, most budget gyms in the U.S. fitness industry are demonstrating a robust revenue rebound from 2020 and early 2021 pandemic-lows as pandemic-related restrictions ease.
– In February 2022, the fund partnered with BRP Companies, a Black-owned and operated real estate firm with a majority-diverse employee base, to invest in Arboretum, a to-be-built, 292- unit, garden-style rental community located in Farmingville, New York, a multifamily rental constrained market on Long Island. BRP has hired several diverse-owned businesses as vendors on the project and Basis Investment Group, a Black and female-owned commercial real estate investment firm, is acting as the preferred equity investor. This investment enables BRP Companies to expand its business beyond its historical focus of developing urban housing and highlights its strong capabilities and longstanding track record, which includes being New York City’s third most active real estate developer in 2020.
– In September 2021, the fund invested in Tricolor, a fintech company with a majority-diverse employee base that leverages proprietary AI-powered technology to sell and provide financing for high-quality, affordable used vehicles to underserved Latinx customers. The U.S. Latinx market is growing at 8.6 percent, faster than China or India, and is equivalent to the eighth largest economy in the world. Tricolor is headquartered in Dallas, Texas and operates 50 dealerships across Arizona, California, Nevada and Texas. The company won the 2021 LendIt Fintech Industry Award for Excellence in Financial Inclusion, and in April became the first consumer auto finance issuer of a social bond. Tricolor is also certified by the U.S. Treasury Department as a Community Development Financial Institution (CDFI). CDFIs are institutions focused on expanding economic opportunity in low-income communities by providing access to financial products and services.
Douglas McNeely, head of BlackRock’s Strategic Client Coverage Group, commented, “BlackRock believes it is essential that we collaborate with our clients and the broader financial services industry to identify opportunities that drive real, long-lasting impact in the communities that we serve. Through this fund, we are harnessing the power of the BlackRock platform and the active partnership of our clients to identify strong investment opportunities that align with our clients’ and partners’ ethos.”
Aaron Anderson, senior vice president and treasurer, PayPal, commented, “It is through catalytic funds like these that we can create pathways to economic opportunity for underserved communities. Building an inclusive economy requires collective action and we are proud to be joining BlackRock and this initial group of investors to drive sustained economic growth and equity.”
Jayson Bronchetti, chief investment officer and head of risk, Lincoln Financial Group, commented, “While we recognize that the issues around racial inequity will not be solved overnight, direct investments across private asset classes into undercapitalized communities are an important step in the right direction. Our partnership with the BlackRock Impact Opportunities Fund aligns with our Responsible Investing efforts to help deliver both differentiated returns and a measurable impact on undercapitalized communities.”
Victor Terry, chief diversity officer, State Farm®, commented, “State Farm is committed to building safer, stronger and better educated communities. We foster a diverse and inclusive culture within our company, throughout our communities and across all organizations with which we partner. Investing in the BlackRock Impact Opportunities Fund allows the chance for a connection to help more people experience financial well-being. Our aspirations align as we both continue to look for ways to invest in the future and support our local communities.”
Carlos Rangel, vice president and chief investment officer, W.K. Kellogg Foundation, commented, “The BlackRock Impact Opportunities Fund is poised to have a tremendous impact on the movement to advance racial equity in financial markets with its influence and mission to get much needed capital to communities of color. We learned from the Business Case for Racial Equity that the U.S. stands to realize an increase in $2.7 trillion in GDP by closing the racial equity gap; that number could increase to $8 trillion by 2050. We’re proud to support this bold effort to reap those gains and to build on our long-standing relationship with BlackRock.”