BlackRock eyes at least $100bn of inflows in alts by 2023

The asset management giant outlined large opportunities in private wealth, Asia-Pacific and sustainability during its latest investor day.

BlackRock is seeking at least $100 billion of capital raising across its alternatives platform by 2023.

Speaking on the firm’s investor day last week, global head of BlackRock Alternative Investors Edwin Conway said: “Over the past five years alone we have raised $100 billion. However, we’d expect to raise the same amount if not more – $100 billion-plus – in only the next three years. A much more truncated period of time, but I think that speaks to the range of what we do, and also the ambition and appetite for our clients.”

Conway noted that in 2016, BlackRock only had two funds larger than $1 billion. Since then, the firm has raised 14 funds with more than $1 billion of third-party capital.

The firm plans to invest more in growth drivers credit and infrastructure in the next three-to-five years – the two asset classes that are “the most underdeveloped and underinvested part within our clients’ portfolios”, Conway said.

BlackRock Investor Day - Edwin Conway
Conway: it’s time ‘to bring alts to the many’

“[It’s] not just that, but they have very attractive risk-return characteristics. Importantly, they are yield and income enhancing which is in very high demand today,” he said.

Along with credit and infrastructure, BlackRock also aims to invest in “growth accelerators” such as private wealth, the APAC region and sustainability.

Approximately 90 percent of capital in the firm’s alternatives business is from institutional investors, and the remaining 10 percent in private wealth. BlackRock plans to shift this with a goal of about “25 percent or maybe even plus” for the latter in the coming years as the growth of global wealth and prevalence of alternatives in wealth client portfolios becomes more significant, Conway said.

“Today is really the time for us to make alternatives far less alternative,” said Conway. “It’s a global opportunity and the relationships we have largely established and the brand that we hold with private banks to wire houses and independent IRAs is quite unmatched. And it’s time to capitalise on that and to bring alts to the many, and not the select few, not just the ultra-high-net-worth investors.”

APAC is also a focus market for the firm. BlackRock wants to capitalise on opportunities in China as well as emerging Asia from both a deal sourcing and investor standpoint.

“Very large and very sophisticated pools of capital exist there, and they are looking for trusted access to this global alternative opportunity set. Creating local products for local consumption and local products for global consumption is a critical part of our going forward strategy in APAC,” he said.

“In all aspects of what we are doing, continue to see more product innovation,” he noted.

BlackRock Alternative Investors manages $297 billion of client assets in alternatives, according to investor day materials. Approximately one third of that figure is held in liquid credit; 31 percent in illiquid assets including private equity, real assets and private credit; 26 percent in hedge funds; and the remaining 9 percent in committed capital. In the past 12 months, the firm has raised $47 billion across its alternatives business, representing an organic growth rate of 24 percent, it said.

BlackRock said in January that it raised at least $3.44 billion for its direct private equity strategy, Long Term Private Capital. In April, it closed its third global renewables fund on $4.8 billion, almost doubling its $2.5 billion target, as reported by affiliate Infrastructure Investor.

BlackRock also inked a deal with Singaporean state investor Temasek to launch Decarbonization Partners: a series of late-stage venture capital and early growth private equity funds to invest in decarbonisation opportunities, with a $1 billion fundraising target. It is also in market with a growth equity capability that is directed towards more late-stage venture, early-stage growth investing, Conway said. Further details on the fund were not disclosed.