On the heels of a strong 2001, BlackRock, the New York-based money manager is taking several steps to ensure it continues on the growth curve in 2002.
Those steps include grabbing top personnel from other firms, adding new products and possibly acquiring other firms.
That would build on what was a good year. In mid-January BlackRock announced that its mutual fund assets under management had increased more than 23% in the past 12 months to more than $86 billion, buoyed by steady inflows into its fixed-income and money market funds. Its lineup of institutional money market funds, the BlackRock Provident Institutional Funds, provided the lion's share of growth, posting asset growth of 46% to $53.2 billion.
So what is on BlackRock's agenda for 2002?
Laurence D. Fink, BlackRock's CEO, told analysts and investors during a teleconference that he expects to enhance its team of equity managers, by "lifting out" another two or three equity management teams from other companies, Fink said. Earlier this month, BlackRock announced that it had opened a new Boston office to house a newly assembled seven-member small- and mid-cap equity team. Wayne Archambo, a former partner with Boston Partners Asset Management, is leading the team.
While BlackRock has inked a contract agreeing not to solicit any of Archambo's existing clients through August 2002, the firm expects to raise more than $1 billion in assets for the team to manage, Fink said.
"It can make more sense to do a liftout rather than buying a company, like Federated Investors did with the Kaufman Fund, especially if you can get a team without buying the luggage," said Patricia Ouimet, a management company securities analyst with Putnam Lovell Securities.
BlackRock's equity business has been struggling, said Ouimet. While BlackRock's mutual fund operation is still in its infancy and only accounts for about 10% of overall assets, the firm can beef up its equity capabilities and equity mutual fund assets through additional liftouts, she said.
And to keep the staff it has from straying, BlackRock is set to debut new long-term incentive equity-ownership awards which it is currently negotiating with PNC's compensation committee, bank management and an outside consultant, Fink said. The retention awards, which will be announced sometime in the first quarter, would be granted to key employees in anticipation of the lapse in five-year contracts that were inked with BlackRock executives when PNC Bank acquired the firm in 1995. The new plan will allow us to "identify the leaders of the future and incent people on a long-term basis," Fink said.
Another area that BlackRock is planning to develop is its closed-end product line. It has a strong and successful business in launching and managing closed-end funds, Ouimet said. According to Fink, BlackRock will be launching two additional closed-end funds, the BlackRock Strategic Bond Trust and the BlackRock Strategic High Yield Trust, within the first quarter of 2002.
As far as acquisitions go, BlackRock isn't rushing into any deals just yet. But it also isn't entirely ruling out acquisitions. "There's not a week that goes by that we don't look at other organizations," Fink said.
Commenting on a recently published news article which said that BlackRock was one of the bidders to acquire RREEF, the Chicago-based real estate investment firm, Fink said that his firm was "not as close as the article stated" and that there were still issues on the table.
Delving deeper into the alternative investment arena is something that BlackRock is eyeing, but with great caution. "Alternative investments are the most talked about product in our business, and every firm is talking about rolling out hedge funds," Fink said. "BlackRock has cold feet in that sector. We're taking a little more cautious approach."