Key Takeaways
- • BlackRock Inc. is entering the fund of hedge funds business through the acquisition of HPB Management LLC for an undisclosed amount, according to Hedgeweek.
- • HPB, a New York-based firm with US$150 million under management primarily for wealthy individuals, is run by Howard P. Berkowitz, a 30-year industry veteran and former partner of Michael Steinhardt.
- • Berkowitz will join BlackRock as Managing Director and Chief Executive of the new fund of hedge funds business upon completion.
- • BlackRock, a unit of PNC Financial Services Group Inc., manages just over US$3 billion in hedge funds out of US$273 billion total AUM, with bonds and money-market funds making up more than 90 per cent of overall assets.
- • The deal follows BlackRock's acquisition of Cyllenius Capital Management last year and aligns with a strategy to reduce reliance on fixed income and institutional clients.
Summary
New York-based BlackRock Inc. is entering the fund of hedge funds business through the acquisition of HPB Management LLC, a New York-based firm with US$150 million under management, primarily on behalf of wealthy individuals. The purchase price was not disclosed. The deal represents BlackRock's first foray into fund of hedge funds. Following completion, Howard P. Berkowitz, a 30-year industry veteran and former partner of hedge fund figure Michael Steinhardt, will join BlackRock as a Managing Director and Chief Executive of the fund of hedge funds unit.
Laurence D. Fink, Chairman and Chief Executive of BlackRock, said: "Fund of funds is a natural extension of our alternative-investment offerings." BlackRock, a unit of PNC Financial Services Group Inc., has just over US$3 billion under management in hedge funds, within total assets of US$273 billion. The firm also runs Obsidian, a multistrategy fixed income hedge fund.
The HPB acquisition follows BlackRock's purchase of Cyllenius Capital Management, a hedge fund firm, last year. Earlier this year, BlackRock also hired a team of quantitative investment managers from Weiss Peck & Greer, and recruited professionals specializing in marketing investments to wealthy individuals through mutual funds and separately managed accounts.
The article notes that the deal supports BlackRock's strategy of reducing its dependence on fixed-income investments and institutional investors, as bonds and money-market funds accounted for more than 90 per cent of its assets at the end of the prior year. For HPB, the transaction offers access to pension funds, university endowments and charitable institutions, which form BlackRock's core clientele and are increasingly turning to hedge funds to enhance returns and diversify away from equities. The article also cites BlackRock's risk management expertise, which institutional investors increasingly demand from funds of hedge funds.
The article observes that US mutual fund companies entering the fund of hedge funds business have often preferred acquiring or partnering with specialists rather than building expertise in-house, citing Phoenix Cos.' tie-up with Arden Asset Management, Franklin Resources' alliance with Auda Group, and Oppenheimer Funds' acquisition of Tremont Advisers.
Laurence D. Fink, Chairman and Chief Executive of BlackRock, said: "Fund of funds is a natural extension of our alternative-investment offerings." BlackRock, a unit of PNC Financial Services Group Inc., has just over US$3 billion under management in hedge funds, within total assets of US$273 billion. The firm also runs Obsidian, a multistrategy fixed income hedge fund.
The HPB acquisition follows BlackRock's purchase of Cyllenius Capital Management, a hedge fund firm, last year. Earlier this year, BlackRock also hired a team of quantitative investment managers from Weiss Peck & Greer, and recruited professionals specializing in marketing investments to wealthy individuals through mutual funds and separately managed accounts.
The article notes that the deal supports BlackRock's strategy of reducing its dependence on fixed-income investments and institutional investors, as bonds and money-market funds accounted for more than 90 per cent of its assets at the end of the prior year. For HPB, the transaction offers access to pension funds, university endowments and charitable institutions, which form BlackRock's core clientele and are increasingly turning to hedge funds to enhance returns and diversify away from equities. The article also cites BlackRock's risk management expertise, which institutional investors increasingly demand from funds of hedge funds.
The article observes that US mutual fund companies entering the fund of hedge funds business have often preferred acquiring or partnering with specialists rather than building expertise in-house, citing Phoenix Cos.' tie-up with Arden Asset Management, Franklin Resources' alliance with Auda Group, and Oppenheimer Funds' acquisition of Tremont Advisers.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.