BlackRock

Not to be confused with Blackstone Group. For other uses, see Black Rock (disambiguation).
BlackRock, Inc.
Public
Traded as
Industry Investment management
Founded 1988
Headquarters 40 East 52nd Street
New York, NY 10022
U.S.
Area served
 Worldwide
Key people
 Larry Fink
(Chairman and CEO)
Robert Kapito
(President)
Products Asset management
Revenue Increase US$10.50 billion (2013)[1]
Increase US$2.932 billion (2013)
AUM Increase US$5.1 trillion (2016)[2]
Total assets Increase US$219.87 billion (2013)[3]
Total equity Increase US$26.46 billion (2013)
Number of employees
 12,000[4]
Subsidiaries BlackRock Institutional Trust Company, N.A.
BlackRock Fund Advisors
BlackRock Group Ltd
Website BlackRock.com

BlackRock, Inc. is an American global investment management corporation based in New York City. Founded in 1988, initially as a risk management and fixed income institutional asset manager, BlackRock is by far the world's largest asset manager with $5.1 trillion in assets under management.[2]

BlackRock operates globally with 22 investment centers, 70 offices in 30 countries and clients in 100 countries.[5] Due to its power, Blackrock has been called the world's largest shadow bank.[6][7]

History

Origins

BlackRock headquarters in Midtown Manhattan, New York City.

BlackRock was founded in 1988 by Larry Fink, Robert S. Kapito, Susan Wagner, Barbara Novick, Ben Golub, Hugh Frater, Ralph Schlosstein, and Keith Anderson to provide institutional clients with asset management services from a risk management perspective.[8]

Fink, Kapito, Golub and Novick had worked together at First Boston, where Fink and his team were pioneers in the mortgage-backed securities market in the United States. During Fink's tenure, he had lost $100 Million as head of First Boston. That experience was the motivation to develop what he and the others considered to be excellent risk management and fiduciary.

Initially, Fink sought funding (for initial operating capital) from Pete Peterson of the The Blackstone Group L.P. who believed in Fink's vision of a firm devoted to risk management. Peterson called it Blackstone Financial Management.[9]

In 1992, due to internal confusion, the decision was made to change their name from Blackstone Financial Management to BlackRock. In 1995, Blackstone Group's Stephen A. Schwarzman and Fink had an internal dispute over equity. Fink wanted to share equity with his employees. Schwarzman did not. They agreed to part ways, so the BlackRock partners, (Sue Wagner) orchestrated a deal with PNC Financial Services Group.

In 1995, BlackRock closed the deal with PNC Financial Services Group, while continuing to be managed independently. In 1998, PNC’s equity, liquidity, and mutual fund activities were merged into BlackRock. BlackRock went public in 1999 at $14 a share.[10]

1999–2009

BlackRock grew both organically [11] and by acquisition. In August 2004, BlackRock made its first major acquisition, buying State Street Research & Management's holding company SSRM Holdings, Inc. from MetLife for $375 million in cash and stock.[12] The deal included the mutual-fund business State Street Research Management and closed in January 2005. In September 2006, BlackRock merged with Merrill Lynch Investment Managers (MLIM), halving PNC's ownership and giving Merrill Lynch a 49.5% stake in the company. In October 2007, BlackRock acquired the fund-of-funds business of Quellos Capital Management.[13] In April 2009, BlackRock hired 43 employees from R3 Capital Management, LLC and took control of the $1.5 billion fund.

The U.S. government contracted with BlackRock to help clean up after the financial meltdown of 2008. According to Vanity Fair, the financial establishment in Washington and on Wall Street believed BlackRock was the best choice for the job.[14]

In December 2009, the company acquired Barclays Global Investors (BGI) from Barclays. BGI was headquartered in San Francisco, with research and portfolio management teams in London, Sydney, Tokyo, Toronto, and other cities. BlackRock also acquired BGI's iShares funds.

2010 onwards

In 2010, Ralph Schlosstein, the CEO of Evercore Partners and a BlackRock founder, called BlackRock "the most influential financial institution in the world".[15]

On 1 April 2011, BlackRock (NYSE:BLK) replaced Genzyme (NASDAQ:GENZ) on the S&P 500 index.[16]

At the end of 2014, the Sovereign Wealth Fund Institute reported that 65% of Blackrock's assets under management were made up of institutional investors.[17]

In December 2014 a BlackRock managing director in London was banned by the British Financial Conduct Authority for "not being a fit and proper" person, because he paid £43,000 to avoid prosecution for dodging train fares. BlackRock said: "Jonathan Burrows left BlackRock earlier this year. What he admitted to the FCA is totally contrary to our values and principles."[18]

On August 26, 2015, BlackRock entered into a definitive agreement to acquire FutureAdvisor,[19] a digital wealth management provider with reported assets under management of $600 million.[20]

BlackRock announced in November 2015 that they would wind down the BlackRock Global Ascent hedge fund after losses.[21]

BlackRock Solutions

In 2000, BlackRock launched BlackRock Solutions, the risk management division of BlackRock, Inc. The division grew from the Aladdin System (which is the enterprise investment system), Green Package (which is the Risk Reporting Service) PAG (portfolio analytics) and AnSer (which is the interactive analytics). BlackRock Solutions (BRS) serves two roles within BlackRock. First, BlackRock Solutions is the in-house investment analytics and “process engineering” department for BlackRock which works with their portfolio management teams, risk and quantitative analysis, business operations and every other part of the firm that touches the investment process. Second, BlackRock Solutions (BRS) and the three primary divisions (which include risk management investment platform solutions, FMA, and client solutions) are services that offered to institutional clients. As of 2013, the platform had nearly 2,000 employees.[22]

BlackRock differentiates itself from other asset managers by claiming its risk management is not separate. Risk management is the foundation and cornerstone of the firm's entire platform.[22] Aladdin keeps track of 30,000 investment portfolios, including BlackRock's own along with those of competitors, banks, pension funds, and insurers. According to The Economist, the platform monitors almost 7 percent of the world’s $225 trillion of financial assets.[22]

BlackRock Solutions was retained by the U. S. Treasury Department in May 2009[23] to manage the toxic mortgage assets (i.e. to analyze, unwind, and price) that were owned by Bear Stearns, AIG, Inc., Freddie Mac, Morgan Stanley, and other financial firms that were affected in the 2008 financial crisis.

Key people

Notes

  1. ↑ "BlackRock Reports Quarterly EPS of $4.86 or $4.92 as adjusted" (PDF).
  2. 1 2 " "BlackRock > About Us". October 30, 2016. Retrieved October 26, 2016.
  3. ↑ http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjIyOTI4fENoaWxkSUQ9LTF8VHlwZT0z&t=1
  4. ↑ " "Who Are We". September 30, 2015. Retrieved September 30, 2015.
  5. ↑ url=http://www.blackrock.com/corporate/en-us/about-us
  6. ↑ http://bazonline.ch/wirtschaft/unternehmen-und-konjunktur/Die-groesste-Schattenbank-der-Welt/story/27331110. Missing or empty |title= (help)
  7. ↑ http://www.economist.com/news/special-report/21601621-banks-retreat-wake-financial-crisis-shadow-banks-are-taking-growing
  8. ↑ "BlackRock". Fund Strategy. Retrieved 22 December 2015.
  9. ↑ "Schwarzman Says Selling BlackRock Was 'Heroic' Mistake". Bloomberg.com. Retrieved 17 November 2016.
  10. ↑ "Corporate History". Archived from the original on May 17, 2012. Retrieved 2014-03-22.
  11. ↑ "An Amazing Woman". 85 Broads. 2008-07-22. Archived from the original on October 22, 2014. Retrieved 2008-07-22.
  12. ↑ Eric Hazard (February 8, 2006). "BlackRock Acquiring State Street Research from MetLife". plansponsor.com.
  13. ↑ "BlackRock to Acquire Fund of Funds Business from Quellos Group, LLC" (PDF). 2007-06-26. BlackRock, Inc.
  14. ↑ Andrews, Suzanna. Larry Fink’s $12 Trillion Shadow, Vanity Fair, April 2010: "There is little doubt among the financial establishment in Washington and on Wall Street that BlackRock was the best choice to handle the government’s problems."
  15. ↑ Kolhatkar, Sheelah (December 9, 2010). "Fink Builds BlackRock Powerhouse Without Goldman Sachs Backlash". Bloomberg. Retrieved April 20, 2013.
  16. ↑ "BlackRock to join S&P 500 index, replacing Genzyme". Bloomberg Businessweek. 2011-03-29. Retrieved January 23, 2012.
  17. ↑ "Is BlackRock Too Big". Sovereign Wealth Fund Institute. n.d. Retrieved 9 February 2015.
  18. ↑ "FCA Life Ban For Fare-Dodging Jonathan Burrows". Sky News. 15 December 2014. Retrieved 15 December 2014.
  19. ↑ "BlackRock to Acquire FutureAdvisor". BlackRock Press Releases. BlackRock. Retrieved 26 August 2015.
  20. ↑ Tepper, Fitz (24 June 2015). "YC Alum FutureAdvisor Is Now Managing $600 Million In Assets". TechCrunch. Retrieved 12 September 2015.
  21. ↑ Stevenson, Alexandra (2015-11-18). "BlackRock to Wind Down Macro Hedge Fund". The New York Times. ISSN 0362-4331. Retrieved 2015-11-19.
  22. 1 2 3 Briefing: BlackRock - The Monolith And The Markets, The Economist, December 7, 2013, pp. 24-26.
  23. ↑ Fink, Larry (2010-12-09). "Fink Builds BlackRock Powerhouse Without Goldman Sachs Backlash". Bloomberg. Bloomberg, LP. Retrieved 2014-10-16.

External links

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