Last Updated: 21 November 2023
The word on the street here is that the BlackRock deal to buy BGI is a fait accompli.
As the clock ticks down to the June 18 date when the go-shop clause in the CVC deal to buy iShares expires, it appears ever more likely that we’ve found a new buyer in BlackRock and that CVC will have made a nice little investment, with a quick $175 million payout from the buyout of the deal.
What is the word I’m looking for? Powerhouse. I think that’s it.
BlackRock has demonstrated in recent years that it’s a highly muscular operation with a good eye for talent and wizardry on the distribution side, globally. This is not a move to add some luster to the BlackRock name, à la Invesco/PowerShares. This is a move to pour strength into the areas where BlackRock has less reach, including institutional index funds (and of course retail indexing as well, in the form of the iShares ETFs).
It will be interesting to see how the combined operation manages to leverage the existing ETF business to continue to build iShares. That, to me, is the bugaboo of any mixed structure, in which a large and effective existing sales force is used to being compensated more handsomely through higher-margin products. There will have to be, to some degree, separate sales forces, but my feeling is that there will be synergies in brand, back office, trading and overall resources. I think that, with all the money involved, I’ll put odds on BlackRock getting it right if the deal does go through.
It becomes an enormously different path forward for the people working at iShares, with more issues to work through, but potentially, as well, more opportunity.
Any minute now … keep watching.