BlackRock’s latest fund offerings are increasingly bringing private equity downmarket.
The firm is back on the fundraising trail seeking €1 billion across two European long-term investment funds: BlackRock Private Equity ELTIF and BlackRock Future Generations ELTIF. The former will allow individual investors to invest alongside institutional investors in backing buyout, growth and venture capital opportunities for a minimum investment size of €30,000, according to a statement.
The firm’s previous ELTIFs – its debut Private Infrastructure Opportunities ELTIF, which held a final close on €415 million in December, and Private Equity Opportunities ELTIF, which gathered more than €500 million on final close in April 2021 – required a minimum investment of €125,000. The minimum subscription for Future Generations ELTIF will be the same as the two prior funds.
“The challenges of the past for wealth clients [to get private markets exposure] – access, structure, education and convenience… We see that transformation happening across the board. We definitely applaud it, and we think it’s here to stay,” Edwin Conway, global head of alternatives at BlackRock, told Private Equity International.
He added: “With some of the local changes with regard to what clients can have access to… creating fully funded vehicles, having liquidity access points that are dissimilar to what the traditional 10, 12-year fund is – [these] structures are just going to win for the future.”
The BlackRock Private Equity ELTIF “offers a fully funded solution from launch, which entails only one payment from investors” and “a limited cash drag”, according to the statement. Capital raised for the vehicle will back between 25 and 30 co-investments across a two-year investment period.
Future Generations ELTIF is classified as Article 8 under the EU’s Sustainable Finance Disclosures Regulation. It will invest across key themes including good health and wellbeing, climate, resources, education and financial inclusion in alignment with the United Nations Sustainable Development Goals. The firm is targeting between 25 and 35 investments over a four-year period.
BlackRock revealed plans for ELTIFs with a much lower threshold in February.
Commenting on the fully funded strategy for the PE ELTIF, West Lockhart, head of wealth and family offices for BlackRock Alternatives Specialists EMEA, told PEI at the time that the vehicle will have a single capital call. “We really see the market divided into two parts. One part of the market wants the closed-end structure, they can handle capital calls, and don’t want any cash drag. The other part of the market cares more about simplicity, access and ultimately can’t manage those capital calls efficiently.”
The launch of the vehicles closely follows the European Parliament’s approval of the amendments for ELTIFs, known as ELTIF 2.0, which have fewer restrictions in terms of diversification requirements, leverage, and the ability to invest in funds of funds. The new regulation also has a broader scope on eligible assets as well as investments in non-EU assets, PEI previously reported.
The ELTIF is “quickly becoming the vehicle of choice in Europe”, BlackRock noted in its latest ELTIF report, estimating that the market will triple in value over the next several years, from €10 billion as of end-2022.
Education and training for wealth advisers and retail clients is a key plank of the firm’s push into the retail channel. It launched its Alternatives Academy in February to provide advisers with a comprehensive educational course on investing in private markets.
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