BlackRock (BLK -1.09%) is a leading global investment management firm. The company ended 2023 with a jaw-dropping $10 trillion of assets under management (AUM). These assets run the gamut from shares in large publicly traded companies, single-family homes, and critical infrastructure assets like pipelines. The company manages these assets on behalf of retail, institutional, and exchange-traded fund (ETF) clients.
There is a lot of misunderstanding about what Blackrock does and the companies it owns. At its core, BlackRock is in the asset management business, meaning it manages assets on behalf of the clients who own those assets. So, while BlackRock's funds hold significant stakes in some of the largest companies in the world, the investors in those funds actually own the equity interests in those companies -- not BlackRock. BlackRock is a massive company with significant assets on its balance sheet ($123 billion at the end of 2023). However, direct equity investments from its balance sheet into other companies it doesn't own were only $9.7 billion. In addition, while BlackRock will seed new funds with balance sheet capital and co-invest in others, they're relatively small investments.
To help address some of the misconceptions about BlackRock, here's a look at some of the companies it actually owns and a peek at what it might buy next. Understanding what BlackRock owns and does will help investors better understand the company and determine whether they want to invest money in its stock.
Companies owned
What companies does BlackRock own?
BlackRock has acquired several companies over the years to expand its investment management capabilities. Here's a look at some of the companies it now owns:
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1. Merrill Lynch Investment Management
The company bought Merrill Lynch Investment Management in 2006 to expand its retail and international investment management capabilities. It paid $9.7 billion for the business, creating one of the largest investment management firms with almost $1 trillion in assets under management (AUM) at the time.
2. Barclays Global Investor
BlackRock bought the investment management arm of British bank Barclays (BCS -0.3%), Barclays Global Investor (BGI), in 2009 for $13.5 billion. The transformational transaction created the world's biggest asset manager, doubling BlackRock's AUM to $2.7 trillion.
As part of the deal, BlackRock acquired the popular exchange-traded fund (ETF) platform iShares. The platform now manages more than $3.3 trillion in AUM across 1,400 ETFs. Its largest ETF is the iShares Core S&P 500 ETF (NYSEMKT), with more than $450 billion in AUM in early 2024. It was the second-largest ETF in the world by AUM in early 2024.
3. First Reserve Infrastructure Funds
Blackrock bought the equity energy infrastructure franchise of First Reserve for an undisclosed sum in 2017. The acquisition of First Reserve Infrastructure Funds expanded the BlackRock Real Assets platform to $36.5 billion in client assets.
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4. Kreos Capital
BlackRock bought private debt manager Kreos Capital for a reported $400 million in 2023. The company is a leading provider of growth and venture debt funding for companies in the healthcare and technology sectors. The acquisition bolstered BlackRock's leading global credit asset management capabilities while enhancing its ability to provide clients with private market investment products and solutions.
5. eFront
The investment management firm bought eFront in 2019 for $1.3 billion. The acquisition helped strengthen BlackRock's technology platform.
6. Aperio Group
The company bought Aperio in 2021 for about $1.1 billion. Aperio is a pioneer in customizing tax-optimized index equity separately managed accounts (SMAs). It builds and manages personalized public equity portfolios for clients.
Asset Management
A service offered by financial companies to oversee their clients' financial assets. Many asset managers decide how to administer a client's assets based on their investment strategy.
Other investments
In addition to wholly owned companies, BlackRock has made several strategic minority investments, including:
- Acorns: The company invested in the microinvesting app in 2018. BlackRock has expanded the partnership and its investment over the years, and it is now an anchor investor in Acorns.
- iCapital: BlackRock increased its stake in the leading technology platform for alternative investments in 2020. It's the largest minority investor in the company.
Potential future investments
What companies could BlackRock buy in the future?
BlackRock is an active acquirer. It routinely makes tactical acquisitions to expand its investment management platform. The company has reached agreements to acquire two more companies in 2024:
- SpiderRock Advisors: BlackRock agreed to buy the remaining equity interest in SpiderRock Advisors in early 2024 after initially making a minority investment in 2021. SpiderRock enhances the company's ability to offer personalized SMAs, one of the fastest-growing product segments in the U.S. wealth industry.
- Global Infrastructure Partners (GIP): The company agreed to buy leading infrastructure fund manager GIP in early 2024 for $12.5 billion, including $3 billion in cash. The transaction will create a market-leading, multi-asset class infrastructure investing platform with more than $150 billion of AUM.
Even after closing those deals, BlackRock has significant financial flexibility to acquire other companies. It ended 2023 with $8.7 billion of cash on its balance sheet against $7.9 billion of debt, helping support its strong bond ratings of AA-/Aa3. It expects to fund the GIP deal with additional debt, which it can easily manage. It will still have a lot of financial flexibility to make acquisitions, especially since it can also use its shares as currency to fund deals, as it's doing to finance the bulk of the GIP acquisition.
Given that the company has already made two investments in early 2024, it could be a while before BlackRock makes its next deal because it will need to spend some time integrating the GIP transaction. However, when the company is ready to make another deal, it has the financial flexibility to continue buying companies.
BlackRock has a well-defined strategy for inorganic investments. It will make tactical acquisitions to build out its platform capabilities and make strategic minority investments in companies it could seek to acquire.
Image source: BlackRock.
As the slide shows, BlackRock has made several acquisitions to bolster its alternative investment (i.e., private equity, private credit, real estate, venture capital, and infrastructure) capabilities. That continued in 2024 with the agreement to buy GIP. Seeing the investment manager acquire more companies in the alternative investment space wouldn't be a surprise.
The expected growth in AUM by the alternative investments sector is a major catalyst driving that view. According to a forecast by Preqin, the alternatives industry will add $8 trillion in AUM by 2028, growing to $24.5 trillion. It expects the private credit sector to double to $2.8 trillion in AUM by 2028. The turmoil in the banking sector is causing many smaller banks to pull back on lending (especially for commercial real estate), opening the door for private credit funds to fill in the gaps.
BlackRock could capitalize on the growth in alternatives by acquiring a company like Carlyle Group (CG -0.13%) or Apollo Global Management (APO 1.43%) to better compete against leading alternative asset managers Blackstone (BX 0.6%), Brookfield Asset Management (BAM 2.6%), and KKR (KKR -0.16%). Apollo has an asset management business with $651 billion in AUM and a retirement services company (Athene). It's the leader in alternative credit, investment-grade alternative credit, and U.S. annuity sales. Meanwhile, Carlyle Group ended 2023 with $426 billion in AUM across private equity, private credit, and investment solutions.
Another factor driving the growth in alternatives is retail investors, especially high-net-worth individuals. They are increasingly allocating more of their portfolio to alternative investments. That could lead BlackRock to seek to acquire a more technology-focused startup catering to retail investors like CrowdStreet, EquityMultiple, Fundrise, or YieldStreet. These companies offer private real estate, private credit, venture capital, and other alternative investment opportunities to individual investors. The company could start by making a strategic minority investment in the space, eventually leading to an acquisition.
That has been a path the company has taken in the past. It made a minority investment in SpiderRock in 2021 and then agreed to acquire the remaining stake in 2024. It has several strategic minority investments, including iCapital and Acorns. The company increased its stake in iCapital in 2020 to become its largest minority investor and has done the same with Acorns. It could eventually acquire the remaining interests in those companies.
Related investing topics
The bottom line on companies BlackRock owns
There are a lot of misconceptions about the companies BlackRock owns. The investment manager is often one of the top shareholders of many large U.S. companies. However, it manages those shares on behalf of clients in its ETFs and other investment products that are the actual equity owners in the companies and other assets BlackRock manages. BlackRock owns a few companies, such as investment management and technology platforms. Learning about what BlackRock owns and how it makes money can help investors gauge whether it's a good stock to buy and hold for the long term.
FAQ
FAQ on Companies BlackRock Owns
What companies are owned by BlackRock?
BlackRock has acquired several companies over the years, including Barclays Global Investor, which includes the popular ETF platform iShares. The investment manager also owns eFront, Kreos Capital, Aperio, and Merril Lynch Investment Management. In addition, it agreed to buy SpiderRock and Global Infrastructure Partners in early 2024.
Contrary to popular belief, BlackRock doesn't directly own shares in major corporations, single-family homes, or infrastructure. It manages these investments in its funds and other investment products on behalf of clients.
Does BlackRock own Coca Cola?
Coca-Cola (NYSE: KO) is a publicly traded company owned by its shareholders. Warren Buffett's company, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), owns 9.3% of Coca-Cola's outstanding shares, making it its top shareholder. Coca-Cola was Berkshire's fourth-largest stock holding in early 2024 at 6.7% of its investment portfolio.
BlackRock was the third largest holder of Coca-Cola stock at 4.7%. However, BlackRock doesn't own those shares directly. It manages them on behalf of its clients, including those of its passive ETFs.
Is BlackRock the richest company in the world?
BlackRock is not the richest company in the world. Microsoft (NASDAQ: MSFT) was the largest company by market cap in early 2024 at $3.1 trillion. BlackRock clocked in at No. 113 at a $123 billion market cap. Although the investment firm managed $10 trillion in assets, those were client funds, not assets owned by BlackRock.
Matt DiLallo has positions in Blackstone, Brookfield Asset Management, and KKR. The Motley Fool has positions in and recommends Blackstone, Brookfield Asset Management, and KKR. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.
