Larry Fink is investing approximately $25 billion over the course of a year to position BlackRock as a leading player in infrastructure and private credit. A significant part of this strategy involves retention packages for new hires, with $1.33 billion allocated to ensure that talent from recent acquisitions, such as HPS Investment Partners and Global Infrastructure Partners, remains with the firm.
Fink's focus is on retaining dealmakers who have built their careers at smaller firms, as their expertise is crucial for BlackRock's ambitious growth plans. According to Glenn Schorr from Evercore ISI, while this rapid expansion is faster than organic growth, it carries risks related to integration and management.
BlackRock is distinguishing itself in the alternative investment space, competing with established firms like Apollo, Blackstone, and KKR. Fink aims to dominate both public and private credit markets, appealing to a diverse range of clients, including insurers and sovereign wealth funds. He emphasizes the importance of integrating new team members from the outset, offering them equity in BlackRock and a role in shaping company strategy.
Once the acquisitions of HPS and GIP are finalized, BlackRock will manage nearly $600 billion in alternative assets. The $12 billion purchase of HPS and the $12.5 billion acquisition of GIP are record-setting deals for boutique private asset investors. Additionally, BlackRock is investing $3.23 billion in Preqin to enhance its market data capabilities.
BlackRock's CFO, Martin Small, has stated that the firm is committed to preserving the strengths of its new platforms. HPS leadership will oversee a combined private financing unit, managing around $220 billion in private credit assets. A substantial retention package of $675 million is set aside for approximately 800 HPS employees, with HPS founders joining BlackRock’s global executive committee.
HPS CEO Scott Kapnick will also serve as an observer on BlackRock’s board, and the deal includes potential additional payouts in BlackRock shares based on performance. Similarly, GIP's CEO Adebayo Ogunlesi will join BlackRock’s board, with a retention pool of $650 million for about 400 GIP employees.
The integration of GIP will see it operate as part of BlackRock, moving into the firm's headquarters in New York. This acquisition follows previous challenges BlackRock faced in the alternative investment sector, particularly with the integration of Tennenbaum Capital Partners, which resulted in significant turnover among senior partners.
Analysts highlight that retaining talent is a critical concern in asset management acquisitions, as integration has historically been challenging. Kyle Sanders from Edward Jones notes that BlackRock's ability to keep its new talent will be vital for the success of its expansion strategy.
