The festive decorations may have been packed away for another year, but for CEO Larry Fink and his compadres at BlackRock it was back on with the party hats as they announced results that showed the world’s largest asset manager’s total assets under management topping $14-trillion for the first time.
With admirable understatement, Fink referred to “accelerating momentum across our entire platform”, with inflows of nearly $700bn for the year and a record-busting $342bn in the final quarter.
BlackRock has done a remarkable job in the 38 years of its existence in democratising access to simple, low-cost investments such as ETFs, and Fink is now seeing a similar opportunity in building a significant business in private markets.
Eighty-one percent of US companies with more than $100m in revenues are privately held, and the numbers are even higher in the EU and the UK. The private credit industry that is lending to these companies is expected to double in size by the end of the decade.
Instead of a traditional portfolio of about 60% in stocks and 40% in bonds, Fink is suggesting that a standard portfolio will soon look like 50% stocks, 30% bonds and 20% private assets, and BlackRock has been making acquisitions to position itself for this new reality.
The private credit industry is expected to double in size by the end of the decade
It has spent about $30bn on three acquisitions, including Global Infrastructure Partners, which is the owner of London Gatwick Airport as well as some energy pipelines and more than 40 data centres. It has also acquired Preqin, one of the leading data firms in private markets. The plan is to make investment in private markets as simple and accessible as it is in public markets.
Saks Global: Collapse of an icon
There will be wailing and gnashing of teeth among the matrons of Manhattan at the news that Saks Global, the world’s largest luxury retailer, has filed for bankruptcy protection in the US as the weight of its $5bn debt mountain became too much to bear.
The collapse comes just more than a year after Saks bought its rivals Neiman Marcus and Bergdorf Goodman for $2.7bn with a view to creating a luxury goods powerhouse, but even with Saks’s punchy pricing, you’ve got to sell a lot of handbags to service that level of debt.
Saks had been trading from its iconic Fifth Avenue location since 1924, and its demise will leave a quandary for those who were used to wobbling over there after a three-martini lunch at the Colony Club.
Problems appear to have begun for the company soon after the acquisition, when limited cash on hand forced it to start to delay payments to its vendors, who took steps to defend themselves by limiting the inventory that Saks needed to keep the shelves stocked.
The creditor list includes most of fashion’s big labels, headed by Chanel, which is owed $136m, followed by Kering at $60m and LVMH and Richemont at about $30m.
The mighty Amazon invested $475m into the acquisition on the understanding that Saks would sell on the Amazon website and it would provide Saks with technology and logistics support, but it is on the warpath about the terms of the bankruptcy financing plan, which it says would render its equity investment “presumptively worthless” and shove it to the bottom of the pecking order for repayment.
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