Blackrock is the largest and most powerful asset manager in the world. In the third quarter alone there were net inflows of 221 billion dollars – a new record for the fund giant which has 11.5 trillion dollars in assets under management.

The company celebrating its 25th anniversary on the stock exchange this year. During this quarter of a century, Blackrock has repeatedly identified megatrends, invested heavily in them, and benefited financially from them. „Throughout our history, we have never shied away from making big bets on behalf of our clients,“ CEO Larry Fink said in October, in an interview with analysts on the occasion of Blackrock's latest quarterly results.

The bet on the boom in exchange traded funds (ETFs) paid off in a big way. The asset manager's next bet is on the private capital markets. This primarily involves the five alternative asset classes of private equity, venture capital, private credit, property, and infrastructure. A market segment that grew rapidly worldwide during the many years of low interest rates following the financial crisis. According to data provider Pitchbook, it is expected to reach 20 trillion dollars by the end of 2028.

Blackrock is putting a lot of money into these activities, including acquisitions. Back in 2019, the asset manager acquired the French software provider eFront for 1.3 billion dollars. Last year, Blackrock swallowed the London-based private debt provider Kreos Capital for a rumoured 250 million dollars, in order to expand its existing lending business.

Kreos specialises in growth capital and is considered one of the pioneers of venture debt in Europe – in other words, it provides debt capital to young companies so that their founders can delay the next round of equity financing further. Founded in 1998, Kreos and its 45-strong team had financed more than 750 transactions, with a total volume of around 5.2 billion euros, at the time of the takeover.

This year saw a much larger deal in the infrastructure sector. Blackrock bought Global Infrastructure Partners (GIP) for 12.5 billion dollars – completing the takeover at the beginning of October. The deal makes Blackrock one of the world's largest infrastructure investors, putting it in the same league as Macquarie and Brookfield.

Blackrock's Chief Financial Officer Martin Small said in the latest quarterly results that the acquisition would add 116 billion dollars in assets under management. „We expect GIP to add an estimated 250 million dollars in management fees in the fourth quarter,“ Small added. When he looks ahead to 2025, he would thus assume around 1 billion dollars.

However Blackrock has not publicly commented on reports of another potential deal. The asset manager is said to be one of the parties interested in a takeover of HPS Investment Partners. The US credit fund is currently examining an IPO, but is also considering a sale. An IPO could value HPS at a minimum of 10 billion dollars. If HPS goes to Blackrock instead, it is likely to be a deal as big as the Global Infrastructure Partners takeover.

Blackrock wants to officially close another billion-dollar deal this year: the takeover of Preqin, a data provider specialising in the private markets, for which Blackrock is paying around 3.2 billion dollars. Preqin, like eFront before, is to be docked onto Aladdin. Aladdin is regarded as the heart of Blackrock, and is a kind of operating system for asset managers. With the acquisitions of the software provider eFront and the data provider Preqin, Blackrock is continuing to build its private markets ecosystem.

In order to expand its own private markets franchise, Blackrock not only relies on expensive acquisitions, but also on co-operations. A current example of this is the alliance with the Partners Group. In mid-September, the two asset managers announced their intention to jointly launch a multi-private markets model solution for private investors. According to Blackrock CFO Small, this will revolutionise private markets access for wealth managers. Preqin plays an important role in this. „Information about capital has become almost as important as capital itself,“ says Small.

If Blackrock succeeds in building a platform that increases transparency for investors in the private markets by combining Preqin, Aladdin and eFront, then the idea of mixing public and private markets could become a reality, according to CEO Fink. According to Fink, the private capital markets would then no longer be characterised as an alternative asset class to the traditional, liquid markets. They would then simply be part of the market in which institutional investors trade.

Fink also referred to the new partnerships with software giant Microsoft and the investment company MGX, which is backed by the United Arab Emirates. The project aims to mobilise a total of 100 billion dollars for the construction of AI data centres and energy plants. The parties want to raise 30 billion dollars for an infrastructure fund. The remaining funds could come from debt capital. „The mobilisation of private capital for the construction of AI infrastructure such as data centres and energy supply will open up long-term investment opportunities in the multi-billion dollar range,“ says Blackrock CEO Fink.

However, Blackrock is not dependent on acquisitions for the further growth of the Private Markets franchise, as the management duo have emphasised. „We don't need mergers and acquisitions to achieve our organic growth targets,“ said Small, referring to the existing 170 billion dollar infrastructure platform, and the 85 billion dollar private credit platform.

To understand the financial impact of the private market businesses, it is worth taking a look at the quarterly figures. Alternative assets – of which the private markets are a significant part – only account for 3% of the total 11.5 trillion dollars in assets under management. But this 3% – amounting to 345 billion dollars – generates 11% of Blackrock's fee income. No other asset class has comparable leverage. Blackrock's hunger for private markets is therefore far from being satisfied.