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BlackRock (BLK) to Raise $10B for New Investment Strategy


BlackRock, Inc. BLK seeks to raise about $10 billion from various sovereign-wealth funds, pensions and other big investors, as part of a new business strategy that involves buying and holding stakes in companies. The news was first reported by The Wall Street Journal.

The move is similar to Berkshire Hathaway Inc.’s BRK.B investment strategy. However, unlike Warren Buffett, who started buying whole companies, this new fund will target on taking only minority stakes in companies and then hold them for a long period of time.

According to people familiar with the matter, this new investment vehicle is being called BlackRock’s “Long-Term Private Capital."

Notably, the investments made from this fund will be chaired by Mark Wiseman, whom the company had hired from the Canada Pension Plan Investment Board in 2016, to run its global active equity business. Also, management of the daily activities will be done by André Bourbonnais, the former chief executive officer of Canada’s Public Sector Pension Investment Board, according to the people familiar with the matter.

The new venture may position BlackRock to compete with various Wall Street private equity giants like Carlyle Group LP, Apollo Global Management, LLC APO and its former holding company, The Blackstone Group L.P. BX.

Being one of the largest asset managers, with assets under management of almost $6.3 trillion as of Dec 31, 2017, BlackRock already manages various publicly offered mutual funds and other exchange-traded funds for its investors. However, till now, it did not have a separate fund of its own that would be used to buy stakes in other companies.

Moreover, BlackRock seems well positioned for growth in the future, given its strong global presence, broad product diversification, solid revenue mix and efforts to strengthen the iShares and ETF operations.

Shares of the company have gained 35% in 2017, outperforming the 31.2% growth for the industry it belongs to.

The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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