Blackrock readies venture secondaries fund as market expands
The secondary market for private fund stakes has exploded in size alongside a boom in private markets generally
[NEW YORK] BlackRock is preparing to roll out a new fund that will buy discounted venture capital stakes from other investors, expanding its push into a hot market.
The world’s largest money manager disclosed plans for the fund this month in regulatory filings. BlackRock executives Jarid Colucci, Derek Krouner and Lisa Sun will oversee the vehicle, the firm’s first focusing on secondhand venture stakes.
The secondary market for private fund stakes has exploded in size alongside a boom in private markets generally. After years growing into a force in passive and index fund investing, BlackRock is now in the middle of a broad-based expansion into private markets alongside industry leaders Blackstone, Apollo Global Management and KKR.
A BlackRock spokesperson declined to comment.
The market for venture capital fund stakes is turning into a “more permanent” opportunity for investors that can yield attractive discounts, BlackRock said in a report this year. Venture stakes can be had for an average of 75 per cent of their net asset values, compared with 94 per cent for more conventional buyout stakes, according to the report.
Venture secondaries accounted for just 8 per cent of the US$47 billion general partner-led secondary market in the first half of this year, according to Jefferies Financial Group. But a dearth of traditional dealmaking is increasingly compelling managers to seek other ways to return profits to their investors.
BlackRock is seeking to raise US$400 billion in private market funds by 2030. It recently acquired Global Infrastructure Partners and HPS Investment Partners, catapulting it into the top five in both infrastructure investing and private credit.
The firm’s secondaries strategy suffered a setback in 2022 when three top executives left for Apollo. BlackRock has since raised more than US$2.5 billion for a separate secondaries fund. It also set up a Private Financing Solutions business run by top HPS executives to expand further into private debt, secondaries and financing for private markets.
In the venture secondary markets, BlackRock will contend with industry leaders such as Franklin Resources’ Lexington Partners, Stepstone Group and Industry Ventures as well as newcomers such as Pinegrove Capital Partners and NewView Capital. BLOOMBERG
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