BlackRock may be the biggest asset manager, but that doesn’t mean it isn’t looking to grow more.
BlackRock announced last week that it will be acquiring Infraestructura Institucional, a Mexico-based independent infrastructure investment firm, reports Forbes. Earlier in June, BlackRock also announced a partnership with Petroleos Mexicanos, for developing and financing energy-related infrastructure projects.
Since the financial crisis, asset managers have been forced to look more globally for yield, and they’re feeling the demand for alternative products from their investors. These alternatives are a lucrative option for managers as they tend to have higher revenue potential and performance based fees. BlackRock can earn 0.65% in operating fees of the total assets in its alternative investment funds, whereas actively managed fixed income funds have less than 0.2% in fees and passive fixed income funds have less than 0.05% in operations fees. Performance related fees for alternative investments are similarly much higher than traditional investments.
Looking to Mexico for alternative growth is a smart move, writes Forbes. The country has long-term growth potential, particularly as it is part of NAFTA. BlackRock manages $6 billion in assets under management on it global infrastructure platform, and the new acquisition will add $1 billion to that. BlackRock’s alternative funds have the potential to increase 5% to 6% annually in the coming years through both organic growth and acquisitions, Forbes predicts.
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