BlackRock Chief Predicts Sweeping Asset Managment Consolidation

Tom Burroughes

17 April 2008

US investment firm BlackRock expects a "dramatic consolidation" in the asset management industry as the credit crisis hurts the quality of assets, its chief executive has said. "I expect to see a dramatic consolidation in the investment management business," Laurence Fink, chairman and chief executive of the biggest publicly traded US asset management firm, told an earnings conference call, Reuters reported. "I believe you are going to see institutions who are struggling with low P/E's or struggling with asset quality problems who are going to look to embellish their capital through either sales of their asset management business or contributions of their asset management business," Mr Fink said. BlackRock has grown through recent acquisitions. In 2006 it acquired Merrill Lynch’s investment management unit for $9.5 billion. And last year it bought the fund of funds business of Quellos for $1.7 billion. BlackRock reported first-quarter earnings that fell short of analysts' estimates because of declines in hedge-fund and real-estate investments. Net income rose 24 per cent to $241.7 million, or $1.82 a share, from $195.4 million, or $1.48, a year earlier, the New York-based company said in a statement. Excluding some items, profit was $1.90 a share. BlackRock's fund inflows rose slowly in the first quarter of 2008. Assets under management rose 1 per cent to $1.36 trillion from 31 December 2007.