Will BlackRock, currently the world’s biggest asset manager, be around in 10 years, or be overtaken in the exchange-traded fund market by tech companies like Amazon or Alibaba? Amazon is already in the online lending game. Amazon CEO Jeff Bezos once said, “Your margin is my opportunity”. Will Laurence “Larry” Fink still be CEO or at least Chairman of BlackRock? A lot can happen. BlackRock’s Aladdin is rubbing the lamp, calling on a genie to make its third final wish.
Over the past decade, BlackRock and the elite asset management community benefited handsomely from central bank measures such as quantitative easing, with the rapid creation of money flowing into listed equity markets. At the end of 2017, BlackRock topped US$ 6.29 trillion in assets under management, rivaling nearly the size of the whole sovereign wealth fund market. Can BlackRock get any bigger or at least reach US$ 10 trillion in assets by 2030? This open-ended question can be answered in many ways, but factors such as market access to China, India, and Southeast Asia will be crucial for BlackRock. In fact, SWFI research sees the Asia-Pacific region growing faster than the global AUM rates. BlackRock could be missing out on China, as players like Ant Financial offers products such as Yu’e Bao (Chinese for leftover treasure), a money market fund that was pushed out in June 2013 permitting Alibaba customers to use money leftover in their Alipay accounts.
By 2030, the United Nations predicts planet Earth will have 8.5 billion residents (more potential investors). Sovereign funds could be commanding nearly US$ 20 trillion in assets. Next, corporate boards across the United States, Europe, and Asia might have all but embraced some form of globally recognized ESG standards, inspired by nudgings from CalPERS, BlackRock, and the Swedish buffer funds.
BlackRock Will be Bloomberg
As incumbent financial industry consultants analyze products, regulatory changes, and asset flow patterns, many are missing out on BlackRock’s not-so-secret weapon. As certain financial products and services become cheaper, a key differentiating factor for these firms is technology, which can reduce labor costs, improve services, and reduce execution risks. In an uncompromising fashion, BlackRock continues to push its Aladdin solution on new and current clients in a bid to make quitting harder, while deriving more data insights from its octopus-like client reach. Armed with eleven data centers and more than 30,000 Aladdin users, BlackRock desires to ingrain itself into the workflow of every asset owner – small or big – knowing full well that ETFs and fund mandates can be lost in a whim. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
The British Columbian (B.C.) government and indigenous groups publicly oppose the Trans Mountain Pipeline project over a number of issues, which include environmental concerns (potential pipeline spills) and land protections. The threat of project derailment sent jitters to Houston-based Kinder Morgan, Inc., requiring the company to halt non-essential spending on Trans Mountain Pipeline L.P. Calgary-based Kinder Morgan Canada Limited, which owns the pipeline, is a listed company that is 70% owned by Kinder Morgan and 30% owned by stock market investors (float). Kinder Morgan Canada hired TD Securities to explore options regarding the future of the pipeline.
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Goldman Sachs is poised to name David M. Solomon, the firm’s president, as its new CEO, replacing Lloyd C. Blankfein. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
Larger alternative investment houses and banks are taking ownership stakes in specialist private equity firms. On July 13, 2018, Blackstone Group’s Strategic Capital Group and Goldman Sachs Asset Management’s Petershill program acquired a minority stake in San Francisco-based Francisco Partners. Francisco Partners is a private equity firm focused on tech-related companies, competing against Thoma Bravo, BC Partners, Vista Equity Partners, Bain Capital and other specialists.
Dipanjan (DJ) Deb is the Co-Founder and CEO of Francisco Partners. Before forming the company in 1999, he was a Principal at Texas Pacific Group (TPG).
Francisco Partners was advised by Evercore and Kirkland & Ellis LLP. Simpson Thacher served as legal counsel to Blackstone and Fried Frank served as legal counsel to Goldman Sachs.
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