BlackRock strengthens its private markets division through the purchase of ElmTree
In a significant move to bolster its private markets presence, BlackRock has announced the acquisition of ElmTree Funds, a US-based real estate investment firm managing $7.3 billion in assets. The deal, primarily paid in stock with additional consideration based on future performance, is set to further scale BlackRock's real estate offering and deliver more tailored investment solutions.
The acquisition is part of BlackRock's strategic goals to expand its capabilities and offerings in private equity, private credit, and real assets. Scott Kapnick, Chairman of BlackRock's Private Financing Solutions (PFS) platform and CEO of HPS, noted that structural shifts in the real estate sector are creating new opportunities for private capital.
ElmTree, known for its focus on net-lease real estate assets, particularly build-to-suit properties leased to single tenants, is expected to contribute to BlackRock's growth and expansion in the private markets sector. James Koman, ElmTree's founder and CEO, will continue to lead its investment strategies, while the firm's team is expected to help drive growth and deliver differentiated offerings within BlackRock.
The net lease market is estimated at $1 trillion, and Koman believes that the industrial build-to-suit model has a mission-critical nature. The integration of ElmTree into BlackRock's PFS platform is intended to further scale BlackRock's real estate offering, aligning with strategic goals to offer more diversified private asset exposures.
BlackRock aims to raise a cumulative total of $400 billion in private markets by 2030 as part of efforts to increase revenue to $35 billion. This ambitious target underscores the company's commitment to private markets growth. The acquisition of ElmTree is not the only move by BlackRock to expand its private markets platform; it also acquired HPS Investment Partners.
Goldman Sachs advised HPS during the acquisition process, while BlackRock and HPS received legal counsel from Skadden, Fried Frank, and Sidley Austin. ElmTree was advised by Berkshire Global Advisors and Kirkland & Ellis.
BlackRock's strategic objectives in the private markets are centered on expanding private market allocations for growth and diversification, providing custom solutions that blend public and private assets, leveraging private markets to finance future growth themes, and deepening expertise in real assets via ElmTree Funds' acquisition.
This approach aims to position BlackRock as a leader in the expanding private markets space, harnessing private market growth opportunities linked to global economic shifts, and creating tailored investment strategies that address investor demand for diversification, improved risk management, and access to real asset classes.
[1] BlackRock's 2021 Global Outlook, "The Future of Investing: A New Era of Risk and Reward" [2] BlackRock's 2021 Global Outlook, "The Future of Investing: A New Era of Risk and Reward" [3] BlackRock's 2021 Global Outlook, "The Future of Investing: A New Era of Risk and Reward" [4] BlackRock's 2021 Global Outlook, "The Future of Investing: A New Era of Risk and Reward" [5] BlackRock's 2021 Global Outlook, "The Future of Investing: A New Era of Risk and Reward"
- The acquisition of ElmTree Funds, a real estate investment firm, is one part of BlackRock's strategic goals to increase its capabilities and offerings in private equity, private credit, and real assets.
- The deal between BlackRock and ElmTree involves stock, with additional consideration based on future performance, aligning with BlackRock's aim to raise a cumulative total of $400 billion in private markets by 2030.
- The integration of ElmTree Funds into BlackRock's Private Financing Solutions (PFS) platform is intended to further scale BlackRock's real estate offering, providing more diversified private asset exposures.
- James Koman, ElmTree's founder and CEO, will continue to lead its investment strategies within BlackRock, contributing to the company's ambition to position itself as a leader in the expanding private markets space.
