BlackRock won’t rule out Asia PE strategy as it piles into region

The asset management giant wants to nearly double its annual private markets activity across Asia-Pacific, Michael Dennis, head of alternatives for the region, tells PEI.

BlackRock would not rule out a dedicated Asia-Pacific private equity strategy as it looks to almost double its annual private markets deployment in the region, according to the firm’s head of alternatives for APAC.

Dennis: APAC PE strategy not off the table

The asset management giant has on average deployed about $1.1 billion to $1.2 billion annually in the region over the past three years, Michael Dennis, who also serves as head of APAC capital markets, told Private Equity International. The figure is evenly split across private equity, private credit and real estate.

“We’re putting a substantial amount in the ground on an annual basis and we’re actually expecting that to grow significantly over the next two to three years,” Dennis said.

“Our target is really for that to be $2 billion-plus. We see from our global pools of capital an increasing demand for Asian assets and that’s why we expect to see this ramping up of private deployment in the region.”

BlackRock’s private equity activity in Asia is largely confined to growth equity – an area it has been “heavily focused on ramping up”, Dennis noted. The firm invests there through global comingled vehicles and separately managed accounts. Unlike for private real estate, it does not have a regional blind-pool private equity fund.

“Dedicated APAC PE strategy is certainly something that’s not off the table and where we are actively speaking to clients – it’s just that we want to make sure our fiduciary responsibility to our clients is to put the right strategy in front of them that we’re able to deliver based on that mandate,” Dennis said.

“We certainly think that compared to the past decade the APAC opportunity set is now here and growing. Because of the key structural changes we’ve seen within the Asia opportunity that becomes a bigger question now than it has been in the past due to the depth of the opportunity set.”

Last month the roughly $243 billion Employees Provident Fund of Malaysia selected BlackRock alongside Partners Group to manage one of three sharia-compliant SMAs.

BlackRock led funding rounds last year for Australian hotel guest acquisition software SiteMinder and Indian education start-up Byju’s, among others. The firm reportedly completed a partial exit from South Korean e-commerce platform Coupang via the latter’s $4.55 billion IPO this month.

“We’re deploying more in Asia across a wider variety of sectors and countries,” Dennis added. “India is really emerging as an opportunity from a private equity perspective, off the back of a very healthy market in China and broader opportunities in South-East Asia and Korea.”

BlackRock last month tapped Rachel Lord, its former head for Europe, the Middle East and Africa, to serve as chair and head of BlackRock APAC in Hong Kong. The move is a reflection of Asia as top strategic priority, the firm noted in a statement about Lord’s appointment.

Asia-Pacific accounted for about 7 percent of BlackRock’s $8.7 trillion of assets under management as of 31 December, according to its latest 10-K SEC filing. The region makes up about 12 percent of the firm’s $235 billion of alternatives AUM.

The firm closed its fifth Asian real estate fund above its $1 billion target earlier this month, sister title PERE reported. The fundraising signalled a reversal of fortunes for a series once maligned in the private real estate community after its 2007-vintage, $3.9 billion third fund became overly exposed to large office developments in Singapore just before the global financial crisis.