With the acquisition, the US group could start offering indices and ETFs with underlying private assets
The US asset management giant Blackrock is betting big on private markets and is buying for GBP 2.55 billion (USD 3.2 billion), all in cash, the well-known British data provider specialising in private capital, Preqin (see the press release here and the presentation to investors here).
Preqin was founded 20 years ago by Mark O’Hare, who still controls it with a stake of around 80% through his holding company Valhalla Ventures and who, upon closing of the deal, will not only become a billionaire, but will also join BlackRock as a vice-president.
O’Hare, who led the company as CEO until December 2021, was a manager at Boston Consulting Group and founder of Citywatch, the news service that is now part of Refinitiv, before founding Preqin. O’Hare then passed the baton at the end of 2021 to the new CEO Christoph Knaack, at that time Chief Strategy & Product Officer of Preqin, with a background at Davidson Kempner and KKR. President of Preqin since May 2022 is Sir Bradley Fried, former Chairman of Goldman Sachs International and Goldman Sachs International Bank, with a past also as a member of the Court of Directors of the Bank of England.
Preqin is a leading independent data provider in the private markets, with global coverage of 190 thousand funds, 60 thousand fund managers and 30 thousand investors in the private markets, reaching more than 200 thousand users, including asset managers, insurers, pensions, wealth managers, banks and other service providers. In 2024, Preqin expects to generate about $240 million in revenue with a 99 per cent recurrence rate, having grown at about 20 per cent per year for the past three years.
According to Blackrock’s forecasts, private markets are the fastest growing segment of wealth management, with alternative assets expected to reach $39 trillion by 2030, which means the market for supporting services will also expand proportionally.
As for Blackrock, through its Aladdin platform, it provides technology solutions to over a thousand clients and, in particular, covers private markets with its eFront solution. The combination of eFront with Preqin will thus create a platform that brings together data, research and support for the investment process for fund managers and investors.
In particular, private markets could be made more transparent and accessible to an increasing number of investors, using the battery of tools that have hitherto remained the preserve of the public markets. Blackrock estimates that private markets today represent a total addressable market of $8 billion and that this market could grow by 12 per cent annually, reaching $18 billion by 2030.
In essence, Blackrock, thanks to the acquisition of Preqin, could start offering indices and ETFs with underlying private assets. This was made clear yesterday conference call with analysts by Blackrock’s cfo Martin Small: “Risk calculation models, indices, have become the language of the public markets, they built the whole ETF market and we see all these opportunities in the private markets” (see Reuters here).
“BlackRock’s vision has always been to combine investment, technology and data to deliver solutions that meet the needs of our clients across their entire portfolio. As clients increasingly focus on product selection and portfolio construction, this shift requires technology, data and analytics that create a common language for investing in public and private markets. For us, data is the industry’s strength in technology, capital formation, investment and risk management,” said Rob Goldstein, Chief Operating Officer of BlackRock.
With a view to making the market more transparent and offering support to investors and all private market professionals,
but also to entrepreneurs looking at alternative finance as a solution to grow,
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