BlackRock, the world’s largest asset manager, has announced its acquisition of private equity data provider Preqin for 3.2 billion dollars. This strategic move aims to “bring the principles of indexing to private markets,” according to BlackRock CEO Larry Fink.
Fink asserts that BlackRock will be able to index private markets similarly to public markets. This endeavour requires extensive data, which will be facilitated by Preqin’s comprehensive dataset. Preqin holds information on 190,000 funds, 60,000 fund managers, and 30,000 investors in private markets.
“Consider how data, benchmarks, and risk analytics have transformed public markets,” Fink remarked during a conversation with clients shortly after the deal was announced. “These tools make markets more accessible, from developed to emerging markets, and from equities to bonds. They have enhanced transparency regarding investment performance and the factors that drive returns.”
Advancing data analytics in private markets
Fink envisions that similar advancements in data analytics and indexing will be crucial for the maturation and democratisation of private markets. He emphasised that this acquisition is pivotal in unlocking these developments.
Preqin has been a vital resource for asset managers, insurers, pension funds, and independent asset managers, growing approximately 20 per cent annually over the past three years. With 48,000 clients and a research team of 500 employees, Preqin boasts what it claims to be the “largest and most robust dataset on private capital performance in the world.”
BlackRock is investing over 13 times the projected 2024 return of 240 million dollars for Preqin. Other potential suitors included the London Stock Exchange Group and S&P Global, according to Reuters.
Integration with BlackRock’s Aladdin platform
Preqin will be integrated into eFront, BlackRock’s existing alternative investment management software. This integration, coupled with BlackRock’s Aladdin portfolio management platform, will enable investors to manage both public and private asset classes on a unified platform.
In Luxembourg, private banks and wealth managers, such as Quintet, leverage BlackRock’s Aladdin platform to enhance their investment strategies. The integration of Preqin’s extensive data will further empower these institutions to manage portfolios more effectively, bridging the transparency gap between public and private markets.
A shift in strategy: From data consumer to data owner
BlackRock’s acquisition of Preqin signifies a shift from being a data consumer to becoming a data owner and seller. This transition is part of a broader strategy to diversify revenue sources beyond traditional client money management. By owning Preqin, BlackRock can leverage its extensive client relationships to enhance Preqin’s distribution and improve data standardisation in private markets, which still lag behind public markets in terms of transparency and analytics.
Growth in alternative asset classes
BlackRock’s commitment to expanding into alternative asset classes was underscored by its recent acquisitions. In January, it acquired Global Infrastructure Partners, an independent infrastructure manager with over 100 billion dollars in assets. Last year, it also acquired Kreos Capital to bolster its presence in private debt.
The asset manager predicts that alternative markets will burgeon to 39 trillion dollars by 2030, more than tripling from 12 trillion dollars in 2020. Additionally, the private markets data sector is expected to grow from eight billion dollars in 2024 to 18 billion dollars by 2030, as highlighted in BlackRock’s deal presentation.
Future prospects
While Preqin is expected to continue operating independently for now, Sudhir Nair, the global head of Aladdin, stated that BlackRock aims to collaborate with Preqin to simplify and broaden access to private market investments. He noted this acquisition represents a “significant opportunity” for Aladdin to enhance transparency between public and private markets.
Notably, the acquisition will also substantially increase the wealth of Preqin’s founder, Mark O’Hare, who owns nearly 80 percent of the company through Valhalla Ventures. According to the Bloomberg Billionaires Index, O’Hare will gain approximately two billion dollars post-taxes, surpassing Larry Fink’s net worth of 1.7 billion dollars.
As of the end of March, BlackRock managed 10.5 trillion dollars in client assets, highlighting its unparalleled scale in the asset management industry. This acquisition marks a significant milestone in BlackRock’s ongoing strategy to lead the market in data-driven investment solutions.