BlackRock

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Not to be confused with Blackstone Group, a private equity and alternative investments firm and BlackRock's original parent company. For other uses, see Black Rock.
BlackRock, Inc.
Type Public
Traded as NYSEBLK
S&P 500 Component
Industry Investment management
Founded 1988
Headquarters New York City, USA
Area served Worldwide
Key people Laurence Fink
(Chairman & CEO)
Robert Kapito (President)
Products Asset management
Revenue Increase US$ 9.3 billion (2012)[1]
Net income Increase US$ 2.438 billion (2012)[2]
AUM Increase US$ 4.096 trillion (2013)[3]
Total assets Increase US$ 178.4 billion (2010)
Total equity Increase US$ 45.3 billion (2013)
Employees 10,100 (2011)[1]
Website BlackRock.com

BlackRock, Inc. is a U.S.-headquartered multinational investment management corporation based in New York City. It was founded in 1988, initially as a risk management and fixed income institutional asset manager, and is the world's largest asset manager,[4] and a major provider of investment, advisory and risk management services. The company acquired Barclays Global Investors in December 2009. As of September 30, 2013, BlackRock had $4.096 trillion in assets under management.[3]

Blackrock is a public company quoted on the New York Stock Exchange (NYSE). About 75% of its shares are owned by three financial institutions: Merrill Lynch & Co. (a subsidiary of Bank of America), PNC Financial Services Group and Barclays PLC.

According to Ralph Schlosstein, CEO of Evercore Partners, a New York-based investment bank and a former BlackRock executive: “BlackRock today is one of the, if not the, most influential financial institutions in the world".[5]

History[edit]

Origins[edit]

Blackrock was founded in 1988 by Larry Fink and Robert S. Kapito to provide clients with asset management services from a risk management perspective. Initially, BlackRock was part of the Blackstone Group and was called Blackstone Financial Management.

Fink joined Blackstone in 1988 as a partner, along with Kapito, Ralph Schlosstein, Bennett Golub, Barbara Novick, Susan Wagner, Keith Anderson and Hugh Frater. Fink, Kapito, Golub and Novick had previously worked together at First Boston, where Fink and his team were pioneers in the mortgage-backed securities market in the United States.

Blackstone Financial Management was later renamed BlackRock Financial Management to avoid potential confusion with other Blackstone Group affiliates and to reduce the need for corporate governance restrictions placed on it by Blackstone Group.

The BlackRock team subsequently became an independent financial services firm. PNC Financial Services Group purchased 70% of BlackRock and subsequently PNC consolidated a number of its other asset management subsidiaries into the firm. In 1999, with $165 billion in assets under management, the firm went public although PNC remained its dominant shareholder.

Mergers and Acquisitions[edit]

BlackRock grew through Nucci Consulting Group [organically],[6] and by acquisition.

On Aug 27, 2004, BlackRock Inc agreed to acquire SSRM Holdings Inc from MetLife for $375 million in cash and stock.[7] Another acquisition from MetLife was State Street Research Management, a mutual-fund business, on January 28, 2005. On September 29, 2006, BlackRock completed its merger with Merrill Lynch Investment Managers (MLIM), halving PNC's ownership and giving Merrill Lynch a 49.5% stake in the company. On October 1, 2007, BlackRock acquired the fund-of-funds business of Quellos Capital Management.[8] On April 30, 2009, BlackRock hired 43 employees from R3 Capital Management, LLC and took control of the $1.5 billion fund.

In December 2009, the company acquired Barclays Global Investors (BGI), giving it control of the iShares system. The division formerly branded BGI is headquartered in San Francisco, and has research and portfolio management teams in London, Sydney, Tokyo, Toronto and other cities.

In October 2012, BlackRock bought a stake in the Moscow Exchange (MICEX-RTS) from Russia's state-backed private equity fund.[9] In November 2013, it was reported by the Prime news agency that Blackrock had withdrawn a third of its Russian investments over a week period - a total of $100m.[10]

Barclays Global Investors[edit]

BGI began as units of Wells Fargo Nikko and Barclays Bank which merged in 1996. Later, it helped pioneer the exchange-traded fund business (through its iShares brand).

BGI's active fund management accounted for 50% of the firm's revenue from 2006-2008. The passively managed iShares arm, accounted for about 45% of the revenue of the firm in 2008. At the end of 2008, the iShares division, with more than $290 billion in assets, accounted for about half the U.S. ETF industry. Global ETF assets hit a high of $1tln ($1,032bln) at the end of December 2009, 45.2% above the $710.9bln at the end of 2008.[11]

A bid by BlackRock was announced on June 11, 2009[12] for the whole of BGI, in a mixed cash-stock deal worth around $13.5 billion (37.8 million shares of common stock and $6.6 billion in cash).[13] This bid was successful and Barclays became the third major shareholder of the Group.

On 1 April 2011, BlackRock (NYSE:BLK) replaced Genzyme (NASDAQ:GENZ) on the S&P 500 index.[14]

U.S. Government[edit]

BlackRock Financial Management Inc. was retained by the New York Fed to manage and eventually liquidate the assets held in a newly formed Delaware limited liability company (LLC) to fund the purchase of residential mortgage-backed securities (RMBS) from the securities lending portfolio of several regulated U.S. insurance subsidiaries of AIG.[15]

Aladdin Trading Network[edit]

Aladdin, BlackRock’s electronic in-house investment management platform, combines risk analytics with portfolio management, trading and operations tools.[16] As of 2013, the platform has nearly 2,000 employees.

The risk-management system is based on a large trove of historical data, and uses Monte Carlo methods to build up a statistical picture of the fate of various sorts of stocks and bonds under a range of future conditions.[17] It seeks not only to forecast individual asset movements but to measure how correlated those movements are, and to what effect.[17]

BlackRock makes its facilities available in whole or in part to others. Aladdin keeps track of 30,000 investment portfolios, including BlackRock's own and many of those of its competitors, and banks, pension funds and insurers. According to The Economist, the platform monitors almost 7 per cent of the world’s $225 trillion of financial assets.[17]

Key people[edit]

  • Laurence D. Fink — Chairman & CEO
  • Robert S. Kapito — President
  • Kendrick R. Wilson, III — Vice Chairman
  • Philipp Hildebrand[18] — Vice Chairman
  • Charles Hallac — Senior Managing Director, Chief Operating Officer
  • Gary Shedlin — Senior Managing Director, Chief Financial Officer
  • Bennett W. Golub — Senior Managing Director, Chief Risk Officer
  • Robert W. Fairbairn — Senior Managing Director, Head of Retail and iShares Businesses
  • J. Richard Kushel — Senior Managing Director, Head of Portfolio Management
  • Peter Fisher — Senior Managing Director, Global Executive Committee
  • Rick Rieder — Chief Investment Officer, Fixed Income
  • Rob Goldstein — Senior Managing Director, Head of Institutional Client Businesses and BlackRock Solutions
  • Mark McCombe — Chairman of Asia Pacific Region[19]
  • Linda Gosden Robinson — Senior Managing Director and Global Head of Marketing and Communications

Notes[edit]

  1. ^ a b "BlackRock Reports Fourth Quarter Earnings". January 19, 2011.  BlackRock, Inc. Retrieved January 23, 2012.
  2. ^ "BlackRock, Form 10-K, Annual Report, Filing Date Feb 28, 2012". secdatabase.com. Retrieved Feb 13, 2013. 
  3. ^ a b http://www.pionline.com/article/20131016/REG/131019923/blackrock-aum-tops-4-trillion-mark-in-3rd-quarter
  4. ^ Andrews, Suzanna. Larry Fink’s $12 Trillion Shadow "Larry Fink’s $12 Trillion Shadow". Vanity Fair. Retrieved 2013-04-20. 
  5. ^ Kolhatkar, Sheelah (December 9, 2010). "Fink Builds BlackRock Powerhouse Without Goldman Sachs Backlash". Bloomberg. Retrieved April 20, 2013. 
  6. ^ "An Amazing Woman". 2008-07-22. 
  7. ^ "BlackRock Acquiring State Street Research from MetLife". 
  8. ^ "BlackRock to Acquire Fund of Funds Business from Quellos Group, LLC". 2007-06-26.  BlackRock, Inc.
  9. ^ Reuters (28 September 2012). "Deals of the day -- mergers and acquisitions". Reuters. 
  10. ^ http://themoscownews.com/business/20131122/192066345/US-asset-management-giant-pulls-100M-from-Russia.html
  11. ^ Opalesque (14 January 2010). "BlackRock's global ETF's hit an all time high of $1tln". 
  12. ^ de La Merced, Michael (June 12, 2009). "Blackrock to acquire stake in Barclays unit, NYT, June 12, 2009". The New York Times. Retrieved April 26, 2010. 
  13. ^ "The Blackrock acquisition of Barclays Global Investors". WSJ Dealogic. 12 June 2009. 
  14. ^ "BlackRock to join S&P 500 index, replacing Genzyme". Bloomberg Businessweek. 2011-03-29.  Retrieved January 23, 2012.
  15. ^ "AIG RMBS LLC Facility: Terms and Conditions".  Federal Reserve Bank of New York. Retrieved 2012-01-23.
  16. ^ Kirsten Grind and Telis Demos (April 23, 2013), BlackRock Shelves Platform for Bonds Wall Street Journal.
  17. ^ a b c Briefing: BlackRock - The Monolith And The Markets, The Economist, December 7, 2013, pp. 24-26.
  18. ^ "BLACKROCK NAMES PHILIPP HILDEBRAND VICE CHAIRMAN WITH RESPONSIBILITY FOR LARGE INSTITUTIONAL RELATIONSHIPS IN EMEA AND ASIA PACIFIC". June 13, 2012. 
  19. ^ "BlackRock Appoints Mark McCombe Chairman of Asia Pacific Region". September 9, 2011.  BlackRock, Inc. Retrieved January 23, 2012.

External links[edit]