BlackRock halts plan for infra fund targeting wealthy Europeans
The world’s largest asset manager is for now focusing on offering GIP deals in traditional drawdown funds
[LONDON] BlackRock halted plans to launch an infrastructure fund targeting wealthy Europeans, marking a setback for the Wall Street giant’s efforts to get more individuals to invest in its newly acquired private markets offerings.
The world’s largest asset manager was planning to launch a fund with a minimum investment of 10,000 euros (S$15,118) in the first quarter of this year, according to a September 2024 presentation seen by Bloomberg News. Around the same time, BlackRock registered an open-ended infrastructure fund with regulators in Luxembourg.
It decided to pause the effort because the relatively few and large deals done by its Global Infrastructure Partners (GIP) unit were not a good enough fit for the vehicle, which would’ve allowed quarterly redemptions and let investors access the same investments as insurers and pension funds, according to people familiar with the matter.
Instead, BlackRock is for now focusing on offering GIP deals in traditional drawdown funds, whose typical investors include ultra high-net-worth individuals rather than the mass affluent, the people said, asking not to be identified discussing private information.
The company might still consider ways to offer real assets exposure to wealthy individuals, including through open-ended funds, one of the people added.
A representative for BlackRock declined to comment.
BlackRock’s pivot highlights the various technical and regulatory pitfalls asset managers are facing as they race to tap a US$10 trillion opportunity from smaller investors in Europe.
The setback comes at a time when the pioneer of low-cost stock and bond funds is making an intense push into private markets – a more opaque and exclusive part of finance that’s traditionally been dominated by longtime leveraged-buyout titans such as Blackstone, Apollo Global Management and KKR.
BlackRock acquired New York-based GIP last year for US$12.5 billion. The unit owns assets ranging from airports to pipelines to wind farms. In October, GIP and other investors agreed to buy Aligned Data Centers in a landmark US$40 billion deal.
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Since early last year, BlackRock committed about US$28 billion to acquire private-asset firms, fuelled by chief executive officer Larry Fink’s bet that the traditional 60-40 split of stocks and bonds no longer cuts it for model investment portfolios.
In Europe, it’s been targeting a hiring drive and tie-ups with digital investment platforms. Munich-based Scalable Capital – in which BlackRock holds a minority stake – offers the asset manager’s evergreen private equity fund to individuals in Germany, Austria and Italy.
The private-markets industry targeting wealthy Europeans recently got a boost after the European Commission overhauled rules for the so-called ELTIF wrapper – short for European Long-Term Investment Fund – to make the offerings more attractive to retail investors. While the move has led to a surge in fund launches, money managers have largely refrained from disclosing how much the vehicles have raised so far.
BlackRock has launched two ELTIFs in Europe – one focusing on private equity and the other on multi-alternatives. The latter also has an allocation to infrastructure assets run by GIP. BLOOMBERG
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