BlackRock lifts suspension on long-term fund

The firm received unanimous approval from its LPs to replace Mark Wiseman with Robert Kapito as chairman of the executive investment committee, allowing its Long Term Private Capital Fund to continue investing.

BlackRock’s debut private equity vehicle Long Term Private Capital is continuing with its investment activities following a temporary suspension in December, Private Equity International has learned.

BlackRock’s LTPC fund has received unanimous consent from its investors to replace Mark Wiseman with firm president Robert Kapito as chairman of the executive investment committee and “key person” in the fund’s limited partnership agreement, according to a source with knowledge of the matter. With this consent in place, the fund is “back open for business”, the source said.

BlackRock had been forced to suspend investing from the fund following the termination in early December of Wiseman, the firm’s global head of equities and head of alternatives. He was fired for failing to disclose a workplace relationship.

André Bourbonnais serves as global head of LTPC, leading the 20-person investment team of the fund.

The firm raised a further $1.1 billion last year for LTPC, according to Larry Fink, chairman and chief executive of BlackRock, speaking on the firm’s fourth quarter 2019 earnings call on Wednesday.

This brings the total capital raised thus far for LTPC to $3.85 billion, adding to the $2.75 billion collected by the firm as of April 2019. BlackRock launched the fund in 2018 with a $12 billion target. Wyoming State Loan and Investment Board and Minnesota State Board of Investment are investors in the fund, according to PEI data.

Capital from LTPC will be invested in long-duration positions in private companies. BlackRock struck its first deal from LTPC in August, picking up a 30 percent stake valued at $875 million in Authentic Brands Group, the parent company of Sports Illustrated, Nine West and several other entertainment, apparel and consumer brands.

BlackRock declined to provide further details on LTPC.

Fink also highlighted during that call that the “momentum is accelerating” in the firm’s illiquid alternatives business. Net inflows recorded in the year came to $14 billion, up from $8 billion in 2018 and just $1 billion in 2017. Growth was driven by infrastructure, real estate, long-term private capital and private credit.

Growth in its alternatives assets under management was also driven by the $1 billion first close of its Global Renewable Power III in December, Fink said.

BlackRock’s alternatives business, which ranges from real assets and hedge fund solutions to private equity and private credit, reached $173 billion as of end-December last year, accounting for around 2.6 percent of its total assets.

Fink noted that alternatives is one of the three “strategic areas” of the firm, along with iShares – the firm’s exchange-traded funds platform – and technology services. The latter generated record revenues of $974 billion in 2019, an increase of 24 percent from 2018. This was driven by the firm’s continued investment in its risk management platform Aladdin and the acquisition of financial software company eFront.

Fink also noted that BlackRock has its sights set on becoming the industry leader in sustainable investing.

“Our goal is to also be the global leader in sustainable investing by incorporating sustainability at the core of how we manage risk, how we construct portfolios, how we design products and most importantly how we engage with companies,” Fink said.

He added that the industry is entering a “new era of finance” and warned that investment risks presented by climate change are set to drive a significant re-allocation of assets. This was also Fink’s message in his annual letter to CEOs published on Tuesday, which noted “investors and governments all need to be more prepared”.

To this end, the firm will make sustainability the standard for investing, including making sustainable investing more accessible to more of its investors. It also plans to double its environmental, social and governance offerings to 150 funds over the next few years including sustainable versions of its flagship iShares, Fink said.

Other highlights in the last year include signing a memorandum of understanding with Temasek Holdings to explore establishing an asset management joint venture in China.

BlackRock generated a record $429 billion of total net inflows in 2019, representing 7 percent annualised organic asset growth and 5 percent organic base fee growth. The firm returned $3.8 billion to shareholders in 2019, in line with 2018’s $3.6 billion.

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