BlackRock
BlackRock, Inc. is an American multinational investment company. It is the world's largest asset manager, with $10 trillion in assets under management as of December 31, 2023.[1] Headquartered in New York City, BlackRock has 78 offices in 38 countries, and clients in 100 countries.[1] BlackRock is the manager of the iShares group of exchange-traded funds, and along with The Vanguard Group and State Street, it is considered to be one of the Big Three index fund managers.[3][4] Its Aladdin software keeps track of investment portfolios for many major financial institutions and its BlackRock Solutions division provides financial risk management services. The head of Aladdin is Sudhir Nair.[5] As of 2023, BlackRock was ranked 229th on the Fortune 500 list of the largest United States corporations by revenue.[6]
For other uses, see Black Rock.Company type
1988
50 Hudson Yards
New York City, U.S.
Worldwide
- Larry Fink
(Chairman and CEO) - Robert S. Kapito
(President) - Philipp Hildebrand
(Vice chairman)
US$17.86 billion (2023)
US$6.275 billion (2023)
US$5.502 billion (2023)
US$10.01 trillion (2023)
US$123.2 billion (2023)
US$39.35 billion (2023)
≈ 19,800 (December 2023)
BlackRock has sought to position itself as an industry leader in environmental, social, and corporate governance (ESG). It has been criticized for investing in companies that are involved in fossil fuels, the arms industry, the People's Liberation Army and human rights violations in China. Others have scrutinized BlackRock for its efforts to reduce its investments in companies that have been accused of contributing to climate change and gun violence and its promotion of gender diversity; the U.S. states of West Virginia, Florida, and Louisiana have divested money away from or refuse to do business with the firm because of its ESG policies. The company has also faced criticism for its close ties with the Federal Reserve during the COVID-19 pandemic.
History[edit]
1988–1999[edit]
BlackRock was founded in 1988 by Larry Fink, Robert S. Kapito, Susan Wagner, Barbara Novick, Ben Golub, Hugh Frater, Ralph Schlosstein, and Keith Anderson[7] to provide institutional clients with asset management services from a risk management perspective.[8] Fink, Kapito, Golub and Novick had worked together at First Boston, where Fink and his team were pioneers in the mortgage-backed securities market in the United States.[9] During Fink's tenure, he had lost $90 million as head of First Boston. That experience was the motivation to develop what he and the others considered to be excellent risk management and fiduciary practices. Initially, Fink sought funding (for initial operating capital) from Peter Peterson of The Blackstone Group who believed in Fink's vision of a firm devoted to risk management. Peterson called it Blackstone Financial Management.[10] In exchange for a 50 percent stake in the bond business, initially Blackstone gave Fink and his team a $5 million credit line. Within months, the business had turned profitable, and by 1989 the group's assets had quadrupled to $2.7 billion. The percent of the stake owned by Blackstone also fell to 40%, compared to Fink's staff.[10]
By 1992, Blackstone had a stake equating to about 36% of the company, and Stephen A. Schwarzman and Fink were considering selling shares to the public.[11] The firm adopted the name BlackRock, and was managing $17 billion in assets by the end of the year. At the end of 1994, BlackRock was managing $53 billion.[12] In 1994, Schwarzman and Fink had an internal dispute over methods of compensation and equity.[11] Fink wanted to share equity with new hires, to lure talent from banks, unlike Schwarzman, who did not want to further lower Blackstone's stake.[11] They agreed to part ways, and Schwarzman sold BlackRock, a decision he later called a "heroic mistake."[11][13] In June 1994, Blackstone sold a mortgage-securities unit with $23 billion in assets to PNC Financial Services for $240 million.[14] The unit had traded mortgages and other fixed-income assets, and during the sales process the unit changed its name from Blackstone Financial Management to BlackRock Financial Management.[11] Schwarzman remained with Blackstone, while Fink became chairman and CEO of BlackRock.[11]
1999–2009[edit]
On 1 October 1999, BlackRock became a public company, selling shares at $14 each via an initial public offering on the New York Stock Exchange.[15][12][16] By the end of 1999, BlackRock was managing $165 billion in assets.[12] BlackRock grew both organically and by acquisition.
In 2000, under the direction of Charles Hallac, BlackRock launched BlackRock Solutions, its analytics and risk management division. The division grew from the Aladdin System, the enterprise investment system, Green Package, the Risk Reporting Service, PAG (portfolio analytics), and AnSer, the interactive analytics.[5]
In August 2004, BlackRock made its first major acquisition, buying State Street Research & Management's holding company SSRM Holdings, Inc. from MetLife for $325 million in cash and $50 million in stock. The acquisition increased BlackRock's assets under management from $314 billion to $325 billion.[17] The deal included the mutual-fund business State Street Research & Management in 2005.[14]
BlackRock merged with Merrill's Investment Managers division (MLIM) in 2006,[12][18] halving PNC's ownership and giving Merrill a 49.5% stake in the company.[19]
In October 2007, BlackRock acquired the fund-of-funds business of Quellos Capital Management.[20][21]
In April 2009, BlackRock acquired R3 Capital Management, LLC and management of its $1.5 billion fund.[22]
In May 2009, BlackRock Solutions was retained by the U. S. Treasury Department[23] to analyze, unwind, and price the toxic assets that were owned by Bear Stearns, American International Group, Freddie Mac, Morgan Stanley, and other financial firms that were affected in the 2007–2008 financial crisis.[24][25] The Federal Reserve allowed BlackRock to superintend the $130 billion-debt settlement of Bear Stearns and American International Group.[26]
In 2009, BlackRock became the largest asset manager worldwide.[14]
2010–2019[edit]
In February 2010, to raise capital needed during the financial crisis, Barclays sold its Global Investors unit (BGI), which included its exchange traded fund business, iShares, to BlackRock for US$13.5 billion and Barclays acquired a near-20% stake in BlackRock.[27][28]
On 1 April 2011, BlackRock was added as a component of the S&P 500 stock market index.[29][30]
In 2013, Fortune listed BlackRock on its annual list of the world's 50 Most Admired Companies.[14]
In 2014, BlackRock's $4 trillion under management made it the "world's biggest asset manager".[31] At the end of 2014, the Sovereign Wealth Fund Institute reported that 65% of Blackrock's assets under management were made up of institutional investors.[32]
By 30 June 2015, BlackRock had US$4.721 trillion of assets under management.[33] On 26 August 2015, BlackRock entered into a definitive agreement to acquire FutureAdvisor,[34] a digital wealth management provider with reported assets under management of $600 million.[35] Under the deal, FutureAdvisor would operate as a business within BlackRock Solutions (BRS).[34] BlackRock announced in November 2015 that they would wind down the BlackRock Global Ascent hedge fund after losses. The Global Ascent fund had been its only dedicated global macro fund, as BlackRock was "better known for its mutual funds and exchange traded funds." At the time, BlackRock managed $51 billion in hedge funds, with $20 billion of that in funds of hedge funds.[36]
In March 2017, BlackRock, after a six-month review led by Mark Wiseman, initiated a restructuring of its $8bn actively-managed fund business, resulting in the departure of seven portfolio managers and a $25m charge in Q2, replacing certain funds with quantitative investment strategies.[37] By April 2017, iShares business accounted for $1.41tn, or 26 percent, of BlackRock's total assets under management, and 37 percent of BlackRock's base fee income.[38] Also in April 2017, BlackRock backed the inclusion of mainland Chinese shares in MSCI's global index for the first time.[39]
2020–present[edit]
In January 2020, PNC Financial Services sold its stake in BlackRock for $14.4 billion.[40] In March 2020, the Federal Reserve chose BlackRock to manage two corporate bond-buying programs in response to the COVID-19 pandemic, the $500 billion Primary Market Corporate Credit Facility (PMCCF) and the Secondary Market Corporate Credit Facility (SMCCF), as well as purchase by the Federal Reserve of commercial mortgage-backed securities (CMBS) guaranteed by Government National Mortgage Association, Fannie Mae, or Freddie Mac.[26][41][42] In August 2020, BlackRock received approval from the China Securities Regulatory Commission to set up a mutual fund business in the country. This made BlackRock the first global asset manager to get consent from the Chinese government to start operations in the country.[43][44]
In November 2021, Blackrock lowered its investment in India while increasing investment in China. The firm maintains a dedicated India Fund, through which it invests in Indian start-ups Byju's, Paytm, and Pine Labs.[45][46]
On 28 December 2022, it was announced that BlackRock and Volodymyr Zelensky had coordinated a role for the company in the reconstruction of Ukraine.[47][48]
In April 2023, the company was hired to sell $114 billion in assets of Signature Bank and Silicon Valley Bank after the 2023 United States banking crisis.[49][50]
In June 2023, BlackRock filed an application with the United States Securities and Exchange Commission (SEC) to launch a Spot Bitcoin Exchange-Traded Fund (ETF), and in November 2023 it filed another application for a Spot Ethereum ETF. The spot bitcoin ETF filing and 10 others were approved on 10 January 2024.[51][52] On 19 January 2024, the iShares Bitcoin Trust ETF (BITB) was the first spot bitcoin ETF to reach $1 billion in volume.[53]
In July 2023, the company appointed Amin H. Nasser to its board.[54]
In August 2023, BlackRock signed an agreement with New Zealand to establish a NZ$2 billion investment fund for solar, wind, green hydrogen, battery storage, and EV charging projects as part of its goal of reaching 100 percent renewable energy by 2030.[55][56]
In January 2024, BlackRock announced that it would acquire the investment fund Global Infrastructure Partners for $12.5 billion.[57][58][59] BlackRock agreed to pay $3 billion in cash and 12 million of its own shares as part of the deal to buy GIP.
Issues[edit]
Influence and power[edit]
Due to its power and the sheer size and scope of its financial assets and activities, BlackRock has been called the world's largest shadow bank.[80][31] In 2020, U.S. Representatives Katie Porter and Jesús "Chuy" García proposed a U.S. House bill aiming to restrain BlackRock and other so-called shadow banks.[81] On 4 March 2021, U.S. Senator Elizabeth Warren suggested that BlackRock should be designated "too big to fail", and should be regulated accordingly.[82]
BlackRock invests the funds of its clients (for example, the owners of iShares exchange-traded fund units) in numerous publicly traded companies, some of which compete with each other.[83][84][85] Because of the size of BlackRock's funds, the company is among the top shareholders of many companies, including the largest companies in the world. BlackRock states these shares are ultimately owned by the company's clients, not by BlackRock itself – a view shared by multiple independent academics – but acknowledges it can exercise shareholder votes on behalf of these clients, in many cases without client input.[86]
BlackRock has been the subject of conspiracy theories, including the conspiracy theory that BlackRock owns both Fox News and Dominion Voting Systems, which Snopes described as "false" and PolitiFact described as "mostly false".[87][88] Some BlackRock conspiracy theories have also incorporated antisemitism, such as the conspiracy theory that Jewish people including BlackRock founder Robert Kapito are part of a cabal responsible for COVID and a "COVID agenda".[89]
As of 2024, Blackrock has a 17-person board of directors:[147]
People who have previously served on the Blackrock board of directors include:
