BlackRock, Inc.
(
BLK
) is all set to acquire Swiss Re Private Equity Partners (SRPEP)
AG, the private equity operations arm of the fund management group
Swiss Re Ltd. BlackRock and Swiss Re have made agreements to
divert the latter's investments in SRPEP to BlackRock Alternative
Investors (BAI).
This all-cash deal is expected to be completed sometime around
September 2012. The concerned parties have not yet disclosed the
financial terms of the deal. The acquisition will merge SRPEP into
BlackRock Private Equity Partners (BRPEP).
This merger will bring BRPEP's funding to approximately $15
billion. The agreement will improve its product line-up and human
resources as well. Upon acquisition, the fund is aiming at
exploring the investment opportunities in primary and secondary
funds along with direct co-investments through core fund of
funds.
Earlier, there were several M&A deals in the alternative
investment solutions industry, pointing to a change in attitude of
small insurers and financial institutions. These institutions and
insurers are no longer willing to keep risky assets in their
portfolio in the wake of the changing regulatory backdrop.
As a result, bigger companies are getting hold of such assets
and are consolidating their position. This would eliminate
competition and increase the market share of these companies,
thereby resulting in increased profitability.
Earlier Deals by BlackRock
Earlier this year, BlackRock purchased Canada-based Claymore
Investments. The deal supplemented $7.3 billion of assets under
management, mostly in equity and fixed income and resulted in the
addition of 38 exchange traded funds (ETFs) to its iShares
brand.
In 2010, the company had acquired Helix Financial Group LLC, a
North Carolina-based company. This acquisition expanded
the commercial real estate capabilities of BlackRock
including its Financial Markets Advisory Group practice.
The acquisition of Barclays Global Investors (BGI), a wing
of
Barclays PLC
(
BCS
), in 2009 remains one of the significant deals in BlackRock's
history. The company agreed to purchase BGI, providing it with $3.1
trillion as assets, and its exchange-traded-fund business,
iShares.
The cash-and-stock deal, which was prized at $13.5 billion,
created the world's largest asset management company of that
period. At the end of 2009, BlackRock had $3.4 trillion in assets
under management compared with $1.3 trillion at 2008-end.
Conclusion
BlackRock's purchase of Swiss Re affiliate seems to work in its
favor. The agreement will expand BlackRock's global footprint as
well as will provide the company with a plethora of diversified
assets. Further, the company is about to hire a set of well-trained
personnel for executing business opportunities more
efficiently.
Currently, shares of BlackRock retain a Zacks #3 Rank, which
translates into a short-term Hold rating.
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