In BlackRock’s second quarter (Q2) earnings call, CEO and chairman, Larry Fink, has set out the firm’s vision of expansion into private credit markets.
He said that investors would increasing look at non-public debt markets to access returns, through passive strategies.
“Our growth in bond exchange traded funds (ETFs) this year in a flat market is a great example that more and more people are getting fixed-income exposure as a core element using ETFs,” he said. “If they are starting to try to get more alpha in their fixed income side, they’re going to do that in more the illiquid space of private credit, mortgage-backed securities and in infrastructure debt. I believe we’re very well positioned for that moment when people are recalibrating out of cash and it’s going to be heavily into fixed income, bond funds, it’s going to be also more of the alternative ETFs — alternative income-oriented products.”
The acquisition of private credit data provider Prequin is expected to allow the investment manager to build a offering that will support passive private credit investing.
“We expect it will accelerate the growth and revenue contribution of technology services. The bigger longer-term opportunity is leveraging our engines in Aladdin and indexing with our capital markets expertise to build the machine for the indexing of private markets. With the creation of public benchmarks did to drive stock markets, especially visible through iShares, we believe the combination of BlackRock and Preqin can do for private markets.”
This will rely upon the firm integrating Prequin’s existing technology and services with its current Aladdin platform to support investor access and risk management in the private markets.
“Our recently announced agreement to acquire Preqin is another step in the transformation of our private markets and technology platform,” Fink stated. “As private markets grow, data and analytics will become increasingly more important. We believe our planned acquisition of Preqin will help to compete the whole portfolio by delivering high-quality data integrated with workflows. Ultimately, this should drive increased accessibility and efficiencies in private markets. And the combination of Preqin with Aladdin and eFront presents an opportunity to find a common language for private markets, powering the next generation of whole portfolios. We envision we could bring the principles of indexing to the private markets through standardization of data, through benchmarking and through better performance tools.”
