Blackrock Has Trouble Raising Funds For Their Private Equity Fund
BlackRock launched a fundraising strategy in 2018 to make direct and long-term investments in privately held companies. They planned to raise $12 billion for it, but came up woefully short raising only $3.4 billion by the end of 2020. Information from inside the company now say they hope to grow the fund to between $4 billion and $6 billion in assets over time. Additionally, according to fund documents, BlackRock can’t raise further money until 80% of that money is invested. Despite missing the $12 billion fund target, BlackRock was still successful in raising over $22 billion for illiquid alternative projects in the year ended September 2020.
“As one of the largest first-time private equity funds ever, we look forward to investing in and working with more companies seeking a long-term strategic partner to help them grow their business,” said André Bourbonnais, who heads the strategy known as Long Term Private Capital.
In 2019, Blackrock used the fund to invest in Authentic Brands Group (owned brands like Sports Illustrated and Nine West). It also invested in Creed, a luxury perfume maker, in 2020. BlackRock’s illiquid alternatives franchise has roughly $80 billion invested across infrastructure, credit and other strategies in hard-to-trade wagers and has returned revenues that account for 4% of the firm’s fee in the third quarter while accounting for 1% of assets.
Mr. Bourbonnais, the executive leading the fund, was a top candidate in 2020 for the top job at Canadian pension fund giant Caisse de dépôt et placement du Québec, but he remained at BlackRock.
“As clients are increasing their exposure to private markets, we have raised record amounts for our illiquid strategies over the last year across private credit, real assets and private equity,” said Edwin Conway, the head of BlackRock’s alternatives business.
BlackRock is now looking for new ways to draw professionals to fold by offering their staffers share in profits typically reserved for select executives, investment staff and firm shareholders for future funds.