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BlackRock (BLK) to Acquire SpiderRock, Expand SMA Offerings
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BlackRock Inc. (BLK - Free Report) announced the acquisition of the remaining 75% equity stake in SpiderRock Advisors, a leading provider of customized option overlay strategies in the U.S. wealth market. The deal is expected to close in the second quarter of 2024 and is still subject to customary approvals.
This transaction is an extension of BlackRock’s minority investment of 25% in the firm in 2021 and reinforces its commitment to personalized separately managed accounts (SMAs). The financial terms of the transaction haven’t been disclosed and its impact on BlackRock’s earnings will be immaterial.
As of February 2024, SpiderRock managed roughly $4.8 billion in client assets while BlackRock is an industry leader, with $186 billion in SMAs as of December 2023.
Last month, SpiderRock announced plans to utilize put and call options on the most liquid spot bitcoin ETFs to form collars to mitigate the volatility of cryptocurrency investments. Its SMA strategies seek to manage risk and income for single, as well as diversified portfolios and are accessible through family offices, national broker/dealers, institutional channels and registered investment advisors.
Given the diverse and unique features of offerings, the deal is expected to further expand BlackRock’s offerings in SMA solutions to meet increased demand for personalized, tax-efficient portfolios by wealth managers.
SMAs are one of the rapidly growing product segments in the U.S. wealth industry. Per Cerulli Associates, SMAs are expected to grow to $4 trillion in assets under management (AUM) by 2026 from $2.7 trillion as of Sep 30, 2023. The primary growth driver boosting the demand for SMAs is increased client requirements for customized portfolios to derive tax benefits and value alignments to achieve their investment objectives.
Eve Cout, head of Portfolio Design & Solutions Pillar of BlackRock’s U.S. Wealth Advisory Business, said, “Each investor has unique circumstances inherent with a concentrated stock position or existing SMA portfolio. SRA’s highly complementary solutions can provide advisors with a comprehensive suite of customization capabilities that help solve clients’ unique challenges, such as income generation, downside protection, and tax efficiency through the use of options.”
This transaction is expected to complement the Aperio acquisition, which was executed in 2021, thus further expanding the SMA offerings to fulfill unique client requirements. SpiderRock’s diverse pool of offerings fits into Aperio’s pioneer consultative client services.
In the past, BlackRock has been actively pursuing strategic initiatives to expand inorganically.
In January, the company agreed to acquire Global Infrastructure Partners for a total consideration of $3 billion in cash and roughly 12 million shares. The combined entity is expected to have more than $150 billion in infrastructure client AUM across equity, debt and solutions. It will seek to deliver clients a market-leading, holistic infrastructure expertise across equity, debt and solutions at a substantial scale.
Over the past six months, shares of BlackRock have gained 20.1% compared with the industry’s 23% growth.
Last month, Blackstone Inc. (BX - Free Report) announced the acquisition of credit card receivable for its credit & insurance segment approximating $1.1 billion from Barclays PLC (BCS - Free Report) .
Under the transaction, BCS will enter into a long-term strategic forward flow sale and servicing arrangement with Blackstone related to the accounts. BX’s investments will be made entirely on behalf of the firm’s insurance clients.
Similarly, this January, Franklin Resources, Inc. (BEN - Free Report) completed the acquisition of Putnam Investments. Putnam had $142 billion (excluding PanAgora) in AUM as of November 2023.
The transaction is expected to accelerate BEN’s growth in the retirement space by increasing its defined contribution AUM to more than $100 billion.
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BlackRock (BLK) to Acquire SpiderRock, Expand SMA Offerings
BlackRock Inc. (BLK - Free Report) announced the acquisition of the remaining 75% equity stake in SpiderRock Advisors, a leading provider of customized option overlay strategies in the U.S. wealth market. The deal is expected to close in the second quarter of 2024 and is still subject to customary approvals.
This transaction is an extension of BlackRock’s minority investment of 25% in the firm in 2021 and reinforces its commitment to personalized separately managed accounts (SMAs). The financial terms of the transaction haven’t been disclosed and its impact on BlackRock’s earnings will be immaterial.
As of February 2024, SpiderRock managed roughly $4.8 billion in client assets while BlackRock is an industry leader, with $186 billion in SMAs as of December 2023.
Last month, SpiderRock announced plans to utilize put and call options on the most liquid spot bitcoin ETFs to form collars to mitigate the volatility of cryptocurrency investments. Its SMA strategies seek to manage risk and income for single, as well as diversified portfolios and are accessible through family offices, national broker/dealers, institutional channels and registered investment advisors.
Given the diverse and unique features of offerings, the deal is expected to further expand BlackRock’s offerings in SMA solutions to meet increased demand for personalized, tax-efficient portfolios by wealth managers.
SMAs are one of the rapidly growing product segments in the U.S. wealth industry. Per Cerulli Associates, SMAs are expected to grow to $4 trillion in assets under management (AUM) by 2026 from $2.7 trillion as of Sep 30, 2023. The primary growth driver boosting the demand for SMAs is increased client requirements for customized portfolios to derive tax benefits and value alignments to achieve their investment objectives.
Eve Cout, head of Portfolio Design & Solutions Pillar of BlackRock’s U.S. Wealth Advisory Business, said, “Each investor has unique circumstances inherent with a concentrated stock position or existing SMA portfolio. SRA’s highly complementary solutions can provide advisors with a comprehensive suite of customization capabilities that help solve clients’ unique challenges, such as income generation, downside protection, and tax efficiency through the use of options.”
This transaction is expected to complement the Aperio acquisition, which was executed in 2021, thus further expanding the SMA offerings to fulfill unique client requirements. SpiderRock’s diverse pool of offerings fits into Aperio’s pioneer consultative client services.
In the past, BlackRock has been actively pursuing strategic initiatives to expand inorganically.
In January, the company agreed to acquire Global Infrastructure Partners for a total consideration of $3 billion in cash and roughly 12 million shares. The combined entity is expected to have more than $150 billion in infrastructure client AUM across equity, debt and solutions. It will seek to deliver clients a market-leading, holistic infrastructure expertise across equity, debt and solutions at a substantial scale.
Over the past six months, shares of BlackRock have gained 20.1% compared with the industry’s 23% growth.
Image Source: Zacks Investment Research
Currently, BLK carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Acquisitions Done by Other Asset Managers
Last month, Blackstone Inc. (BX - Free Report) announced the acquisition of credit card receivable for its credit & insurance segment approximating $1.1 billion from Barclays PLC (BCS - Free Report) .
Under the transaction, BCS will enter into a long-term strategic forward flow sale and servicing arrangement with Blackstone related to the accounts. BX’s investments will be made entirely on behalf of the firm’s insurance clients.
Similarly, this January, Franklin Resources, Inc. (BEN - Free Report) completed the acquisition of Putnam Investments. Putnam had $142 billion (excluding PanAgora) in AUM as of November 2023.
The transaction is expected to accelerate BEN’s growth in the retirement space by increasing its defined contribution AUM to more than $100 billion.