BlackRock Leaps Into the PE Business

by Derek Loosvelt | May 26, 2011

Perhaps further confusing the investment management giants BlackRock and Blackstone, the former has recently broken ground in the latter's historically strongest area of operation: private equity.

larry fink blackrock ceoYes, BlackRock, the largest asset management firm in the world (which was spawned by Blackstone, having originally served as a unit of the Stephen Schwarzman-led firm, and whose CEO, Larry Fink, is the highest-paid chief on Wall Street) has jumped into the PE game, hiring three veterans of the industry who founded Merrill Lynch's PE unit and announcing plans to hire more than two dozen additional private equity professionals in the coming year.

Joining BlackRock earlier this week were Nathan Thorne, George Bitar and Mandy Puri. The three founded Merrill's private equity business in 1994 and served at the firm until 2009. Since then, they have "pursued personal interests, served on boards of directors, and were in the initial stages of forming an independent investment partnership." All three had risen the ranks of Merrill's investment banking operations before jumping to its PE unit.

As you may be aware of, BlackRock and Merrill Lynch have a history together (albeit one not all that long). In 2006, Merrill Lynch's investment management business merged with BlackRock, giving Merrill a 49.5 percent stake in BlackRock. Following Bank of America's purchase of Merrill at the beginning of 2009, BofA began to reduce that stake. And, just this week, BlackRock announced that it would buy those remaining shares (7 percent of BlackRock) owned by BofA.

Which means that BlackRock will no longer be partly owned by Bank of America, and thus not feel so constrained when selling its retail investment funds through brokers other than those working for BofA Merrill.

(Pensions & Investments: Private Equity Team Joins BlackRock)

(Investment News: What BlackRock's Break From Bank of America Means for the Retail World)

(Related: Is BlackRock CEO Larry Fink Really the King of the Nerds?)

Filed Under: Finance


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