Blackrock has announced a new initiative to tackle “high risk” clients and ensure their investment success, saying it will now take over “some of the most risky areas” in the asset management industry.
The company, which was previously known as the UK’s biggest private equity fund, said it was now taking over the “most highly risk-sensitive” areas in its wealth management business, which has seen its shares fall in value by more than 50 per cent since 2012.
The announcement comes as Blackrock said it would raise up to $2bn from investors in the next two years.
It is investing $10bn in new projects, while the company is also launching new projects with some of the world’s largest private equity firms.
“This is a massive opportunity for us to help Blackrock achieve its long-term investment vision, as well as to drive the growth of our business, with significant additional capital coming to Blackrock from its global investor base,” said Blackrock chief executive David Sacks.
“We’re very excited about what this means for the future of our industry and look forward to delivering on our ambitious goals.”
Blackrock was launched in 2009, but was once thought of as a niche investment manager with its focus on small, medium and large companies.
But it has become a global investment juggernaut and it now employs more than 1,000 people in the US alone.
The firm has also been the subject of criticism in recent years for its lack of transparency, poor track record of returns and for its “inherent riskiness”.
In November 2015, Blackrock bought back shares in an attempt to regain investor confidence, but that effort was ultimately unsuccessful.
It later announced a buyback of shares.
Blackrock’s announcement follows a series of high-profile cases involving wealthy individuals and organisations in recent months, including the downfall of the hedge fund Bridgewater Associates, which lost $1bn of its money in a scandal that was revealed to have been orchestrated by the firm’s founder, Peter Thiel.
The investment bank, which had $11.7bn in assets under management at the end of 2016, said in November that it was in talks with Mr Thiel and had begun discussions with other large companies in the industry.
Mr Sacks also said BlackRock had hired the US investment firm Carlyle Group to help it build its wealth and asset management businesses.
“Our business is built on high-quality management,” he said.
The move comes as the US has seen record levels of private investment in the stock market, which is forecast to hit $20 trillion by the end (September) 2018. “
It will be an exciting opportunity to build a new generation of wealth management companies.”
The move comes as the US has seen record levels of private investment in the stock market, which is forecast to hit $20 trillion by the end (September) 2018.
However, investors have also been sceptical about Blackrock.
“Investors have been asking about BlackRock for the past year,” said Mark Pecoraro, a professor at the School of Management at the University of Melbourne.
“I don’t think there is any question that Blackrock is a risky investment, but I think investors are still concerned about the risks inherent in a publicly traded company.”
The company said it planned to make some “significant” changes to its business, including reducing its investment in risky areas such as property and equities.
However it also said it had started “small scale” projects with smaller investment firms.
BlackRock said it expects to grow the number of clients it serves by around 10 per cent per year over the next three years, with “a further 10 per and a half per cent growth in 2019”.
“We have a very ambitious goal to grow our client base by 10 per year in the future,” Mr Sacking said.
Mr Thiel’s investment company BlackRock, which he helped to founded in 1999, was also hit by a massive insider trading scandal in 2013 that resulted in the loss of billions of dollars.
The scandal, which also involved former Blackrock executive and hedge fund manager Paul Singer, led to Mr Singer’s departure as CEO and led to a slew of other scandals.
The US Securities and Exchange Commission (SEC) said in a statement that the SEC was “looking into” Blackrock after Mr Sack said it wanted to take over the wealth management industry from the SEC.
“Blackrock has been the beneficiary of a series and growing insider trading scandals,” the statement read.
“As part of that process, we have been reviewing the conduct and practices of Blackrock and we are looking to take action as part of our review of the company.”