BlackRock, Inc. (NYSE:BLK) announced today of it plans to acquire a private-equity property investment advisory firm MGPA with an objective to grow its real-estate business in the Asia-Pacific region and Europe. The amount of the deal has not been disclosed yet.
The world’s largest asset manager told that the deal is expected to close by the third quarter of the year and won’t impact BlackRock’s earnings per share.
Benefits to BlackRock
MGPA will help BlackRock, Inc. (NYSE:BLK) in making its presence felt in the regions that are witnessing high economic growth and expanding middle class. Currently, the New York based firms $13 billion real estate investment business is primarily based in the U.S. and the U.K., and the company does not have any offices or investments in Asia. MGPA will be a great help in overcoming such limitations as almost two-thirds of MGPA’s assets are focused in Asia.
As per McCombe, the high quality management team of MGPA will also be a great addition to BlackRock. The entire team of MGPA will be retained by BlackRock, Inc. (NYSE:BLK), and John Saunders, MGPA’s Asia chief executive officer will continue his present role.
The new real estate business will be utilized for pension, sovereign wealth funds and for family offices and private banks. Also, it can be a good option for insurance companies looking for longer-duration assets.
Also, the acquisition will give more choices to BlackRock’s clients who are looking for options including private equity and real estate that provide higher returns at market risks compared to the prevailing low yields on bonds and uncertain equity market, McCombe said.
The executive told that Southeast Asia and Japan offers numerous real estate investment opportunities while investors must be cautious when it comes to China.
The private equity firm MGPA manages about $12 billion of funds with a main focus on real estate, co-investments and separate-account mandates for institutional investors. The investment advisory firm has about 220 employees in 13 offices in the Asia-Pacific region and Europe, including important cities such as Shanghai, Kuala Lumpur and Warsaw
“The addition of MGPA to BlackRock, Inc. (NYSE:BLK) is an important step in the evolution of our Asia-based investment capabilities and is aligned with the growth of our Asia-Pacific franchise,” said Mark McCombe, BlackRock’s Asia-Pacific chairman.
Growth through Acquisitions
BlackRock, Inc. (NYSE:BLK) has been known for fuelling growth in its alternatives business through acquisitions. The company purchased Merrill Lynch & Co.’s investment unit in 2006 and hedge fund-of-funds business from Quellos Group LLC in 2007. In 2012, the New York based firm acquired fund-of-funds unit from Swiss Re Ltd. As per the statement released today, by the end of March, BlackRock managed $3.9 trillion of assets globally.