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In an attempt to solidify its foothold in the global real estate business, N.Y. based BlackRock, Inc. (BLK - Analyst Report) entered into a definitive agreement with MGPA - an independent private-equity property investment advisory firm - to purchase the latter. However, the terms and value of the deal have not been disclosed.
The transaction is expected to be completed in the third quarter of 2013, subject to customary regulatory approvals and closing conditions.
This acquisition will enable BlackRock to acquire MGPA’s assets under management worth approximately $12 billion. This will take the total amount invested by BlackRock in the worldwide real estate business to $25 billion.
MGPA, which houses offices across the globe, manages real-estate funds for its clients and accounts for institutional investors. Two-third of the company’s assets is deployed in the Asia-Pacific region and Europe. Moreover, MGPA made approximately 130 investments over the past several years in these regions.
On the other hand, BlackRock’s current real estate investment business worth about $13 billion is concentrated mainly in the U.S. and the UK. However, with this acquisition, BlackRock will be able to enhance its presence in real estate markets in the Asia-Pacific region and Europe.
Previous Deals by BlackRock
In 2012, BlackRock acquired Swiss Re Private Equity Partners (SRPEP) AG, the private equity operations arm of the fund management group, Swiss Re Ltd. BlackRock and Swiss Re entered into an agreement to divert the latter’s investments in SRPEP to BlackRock Alternative Investors (BAI). The acquisition merged SRPEP into BlackRock Private Equity Partners (BRPEP).
Further in 2012, BlackRock purchased Canada-based Claymore Investments. The deal supplemented $7.3 billion of assets under management, mostly in equity and fixed income and resulted in the addition of 38 exchange traded funds (ETFs) to its iShares brand.
In 2010, the company acquired Helix Financial Group LLC, a N.C.-based company. This acquisition expanded the commercial real estate capabilities of BlackRock, including its Financial Markets Advisory Group practice.
The acquisition of Barclays Global Investors (BGI), a wing of Barclays PLC (BCS - Snapshot Report) in 2009, remains a significant deal in BlackRock’s history. The company agreed to purchase BGI, furnishing it with $3.1 trillion as assets, and its exchange-traded-fund business, iShares.
BlackRock’s acquisition of MGPA is a strategic fit and is expected to magnify the company’s geographic footprint. Further, it will auger well for the global diversification of the company’s business.
BlackRock currently carries a Zacks Rank #2 (Buy). Other stocks in the same sector worth considering include Invesco Ltd. (IVZ - Analyst Report) and AllianceBernstein Holding L.P. (AB - Snapshot Report). Both these companies carry a Zacks Rank #1 (Strong Buy).