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BlackRock looks abroad for growth with management shuffle

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After building a financial powerhouse over three decades, BlackRock CEO Larry Fink is charting a path for growth beyond the U.S.

Fink announced a massive overhaul of the firm’s leadership in a memo Tuesday, shifting more responsibility to region-specific leaders as well as installing new management in its alternatives investment division and reorganizing staff.

The leadership changes reflect BlackRock’s desire to cement client ties beyond the Americas, where most of its revenue still originates.

Fink frequently underscores BlackRock’s desire to attract customers outside the U.S. and sees great untapped potential abroad. The company, which oversees about $6 trillion in assets, is also using deal-making to advance that goal.

“It shows how hard it is to find growth here in the U.S., where the market is saturated,” said Kyle Sanders, an analyst at Edward Jones. China and Latin America will be key battlegrounds for the asset manager in years ahead, he said.

“It’s time to take that strategy and that playbook from the U.S. and try to deploy it in other regions,” Sanders added.

The changes also heighten speculation about who will succeed Fink, 66, as CEO. A handful of executives are considered to be in the running, including two whose roles are shifting. In recent years these proteges have been shuffled in a variety of senior positions, with Fink preferring not to let one clear successor emerge.

Mark McCombe will take on the newly created role of chief client officer. Mark Wiedman, who earlier this year was promoted to head of international and corporate strategy, will take on Latin America.

The firm also said it’s establishing Latin America as a region organizationally in parallel with Asia-Pacific and Europe, the Middle East and Africa, or EMEA.

To achieve its goal of getting closer to clients outside the U.S., responsibility for institutional client businesses will fall to regional leaders: McCombe in the U.S. and Canada; Rachel Lord in EMEA; and Geraldine Buckingham in Asia-Pacific.

The strategy tracks with the vision Fink laid out at the company’s investor day last year.

“We must connect with each client with their cultures, which means we must be Japanese in Japan, Mexican in Mexico, German in Germany and American in the United States,” he said at the time.

BlackRock has shown an appetite for deal-making abroad in recent years. It acquired the asset management unit of Citibanamex, located in Mexico, in 2018. It announced plans to acquire French software provider eFront in March.

The company is making leadership changes as it addresses other challenges in the asset management industry. With an intensifying war on fees for passive products, the firm has been focusing on alternative investments such as private equity and real estate, which usually charge higher sums.

Edwin Conway, who previously led BlackRock’s interactions with institutional clients, will become global head of the alternatives business, according to the memo. Jim Barry, the firm’s head of real assets within the unit, will become investment chief for the group.

BlackRock’s alternatives push is meant to demonstrate it can be a major player beyond indexed products, which account for about two-thirds of assets under management. On Monday, the New York-based company said it had completed its first fundraising round for a private equity vehicle. The Long Term Private Capital fund secured $2.75 billion from investors, Bloomberg reported Monday.

Staff cuts preceded the news of the leadership changes. BlackRock said in January that it was cutting 3% of its global workforce, the largest reduction in headcount since 2016.

BlackRock shares fell 0.44% to $436.45 in New York trading on Tuesday. They have returned about 12% this year through Monday. The stock fell 24% in 2018.

Other moves outlined in the memo include:

Anne Ackerley will assume responsibility for the retail financial institutions group business and take sole leadership of the retirement solutions group. Charles Hatami will oversee both the financial institutions group and financial markets advisory. BlackRock Vice Chairman Philipp Hildebrand will serve as chairman of both teams, in addition to his other roles. Rick Rieder will lead the global allocation investment team, and will be a portfolio manager for global allocation alongside Dan Chamby, Russ Koesterich and David Clayton. Supurna VedBrat will become head of global trading. Richie Prager will retire in July. Rob Fairbairn will become vice chairman of BlackRock, responsible for some of the firm’s most complex clients and will report to Fink. Armando Senra becomes head of U.S., Canada and Latin America iShares; Dominik Rohe succeeds Senra as head of the Latin America region; and Andrew Landman succeeds Rohe as head of Australasia.The Wall Street Journal reported the changes earlier Tuesday.

Bloomberg News