Wednesday, May 2, 2018

BlackRock Goes For Private Equity Margins

From Pension Pulse:

BlackRock Beefs Up its PE Group?
Trevor Hunnicutt of Reuters reports, BlackRock hires private equity specialists from Goldman Sachs:
BlackRock Inc said on Monday it is hiring two specialists from Goldman Sachs Group Inc to bolster its private equity business in New York, according to a staff memo.

Steve Lessar and Konnin Tam will join the world’s largest asset management company from Goldman Sachs this summer, according to the document, which was seen by Reuters.

Each will be responsible for expanding BlackRock’s role within a business that effectively enables investors in private companies and funds that invest in such firms to resell their stakes to other institutions. Normally, that money is locked up for years.

This market for “secondary” private capital saw a record $58 billion in transaction activity in 2017, according to investment bank Greenhill & Co Inc, with money chasing better returns than exist within public markets....
...Larry Fink is no fool, he knows where the big margins (highest fees) are in asset management and it's definitely not in stocks & bonds, BlackRock's traditional bread and butter business.

He first hired Mark Wiseman away from CPPIB to join his firm and recently hired André Bourbonnais from PSP to build this private markets team up.

Now he's hiring Steve Lessar and Konnin Tam, two stars at Goldman Sachs' Private Equity Group who specialize in secondaries.

You might be asking why secondaries? Let me explain. Go back to read my comment on whether CalPERS is outsourcing its private equity to BlackRock.

Early in January, John Gittelsohn and Melissa Mittelman of Bloomberg reported, Calpers Seeks Help Running Its $40 Billion Private Equity Portfolio:...