Advertisement
Advertisement

BlackRock to Acquire Investment Management Services Provider Aperio for $1.05 Billion

By:
Vivek Kumar
Updated: Jul 19, 2021, 08:22 UTC

BlackRock Inc, the world’s largest investment management firm, said it will acquire an investment management services provider Aperio from Golden Gate Capital and Aperio employees for $1.05 billion in cash.

Stocks

BlackRock Inc, the world’s largest investment management firm, said it will acquire an investment management services provider Aperio from Golden Gate Capital and Aperio employees for $1.05 billion in cash.

BlackRock’s acquisition of Aperio will be funded from existing corporate liquidity and is anticipated to close in the first quarter of 2021. Although minimally dilutive to earnings per share, the transaction is not expected to be dilutive on a cash basis, the company said in the statement.

The deal will boost BlackRock’s separately managed account (SMA) assets by roughly 30% to over $160 billion.

“While modestly dilutive on a GAAP basis in the year one, the purchase provides valuable scale to BlackRock’s (BLK) customized SMA business. Aperio’s track record in ESG investing also compliments BLK’s increased focus and success in this area. BLK intends to keep Aperio as a standalone unit,” said Daniel T. Fannon, equity analyst at Jefferies.

BlackRock shares closed 1.51% higher at $682.87 on Monday; the stock is up over 35% so far this year.

Executive Comments

“The wealth manager’s portfolio of the future will be powered by the twin engines of better after-tax performance and hyper-personalization. BlackRock and Aperio, working together, will bring unmatched capabilities to meet these objectives,” said Martin Small, head of BlackRock’s U.S. Wealth Advisory business.

“The combination will bring institutional quality, personalized portfolios to ultra-high net worth advisors and will create one of the most compelling client opportunities in the investment management industry today.”

BlackRock Stores Stock Price Forecast

Eight equity analysts forecast the average price in 12 months at $719.14 with a high forecast of $800.00 and a low forecast of $602.00. The average price target represents a 5.31% increase from the last price of $682.87. From those eight analysts, seven rated “Buy”, one rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $750 with a high of $1,140 under a bull-case scenario and $339 under the worst-case scenario. The firm currently has an “Overweight” rating on the asset manager’s stock.

Several other analysts have also upgraded their stock outlook. BlackRock had its price target raised by Deutsche Bank to $795 from $685. Deutsche Bank currently has a buy rating on the asset manager’s stock. Barclays lifted their price target on BlackRock to $700 from $625. Wells Fargo reaffirmed a buy rating on shares of BlackRock.

Analyst Comments

“We believe BlackRock (BLK) is best positioned on the asset management barbell given leading iShares ETF platform, multi-asset & alts combined with technology/Aladdin offerings that should drive 10% EPS CAGR (2020-22e) via 5% avg LT organic growth & continued op margin expansion,” said Michael Cyprys, equity analyst at Morgan Stanley.

“We see further growth ahead for Alts, iShares, international penetration, and the institutional market in the US. We expect a premium to widen as BLK takes a share in the midst of market dislocation and executes on improving organic revenue growth trajectory,” Cyprys added.

Upside and Downside Risks

Upside: 1) Growth in highly scalable iShares franchise driving margin expansion and strong EPS growth. 2) Further growth in tech & high fee products such as alts, active equities, and multi-asset – highlighted by Morgan Stanley.

Downside: 1) Market share loss in ETFs; lack of positive op leverage in declining markets. 2) Worse than expected base fee pressure through pricing initiatives or mix shift. 3) Greater regulatory scrutiny; liquidity challenges in products.

About the Author

Vivek completed his education from the University of Mumbai in Economics and possesses stronghold in writing on stocks, commodities, foreign exchange, and bonds.

Did you find this article useful?

Advertisement