BlackRock's $3.2 Billion Preqin Deal: The Full Story

BlackRock's acquisition of Preqin sparks major shifts in financial data. This move, part of a strategic expansion, is set to reshape the data provider landscape.

Published July 02, 2024 - 00:07am

4 minutes read
United Kingdom
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BlackRock Inc. is nearing a £2 billion ($2.5 billion) deal to acquire private capital database provider Preqin, bolstering its robust portfolio and signaling a significant shift in the data provider landscape. The deal, which has been closely watched by the industry, positions BlackRock as a key player in the data analytics and private markets sectors.

According to inside sources, BlackRock has outpaced competitors including S&P Global and Bloomberg, emerging as the likely buyer for London-based Preqin. The transaction is anticipated to be officially announced soon, with negotiations ongoing and subject to final agreement.

Once finalized, the acquisition will integrate Preqin's extensive database services into BlackRock's technological infrastructure, including its Aladdin and eFront platforms. This integration is expected to enhance BlackRock's risk management capabilities and expand its reach in tracking fund performance, deals, and portfolio companies. Preqin's database covers nearly 30,000 firms and almost 62,000 funds, making it a critical resource for asset managers globally.

Preqin, established two decades ago, specializes in monitoring and analyzing the performance of private equity and hedge funds, significantly growing its user base to around 200,000. The company has achieved robust growth, with annual revenue increases of over 20% in the past three years, reflecting the growing importance of private capital markets which are projected to surpass $40 trillion in assets by the end of the decade.

In a move to maintain Preqin's unique offerings, BlackRock plans to keep Preqin as a standalone service while leveraging its data feeds for broader application within BlackRock's operations. This strategic acquisition, pegged at 13 times Preqin's expected 2024 revenue of $240 million, underscores BlackRock's commitment to expanding its capabilities in data analytics and financial information services.

Mark O'Hare, the founder of Preqin, will be significantly impacted by this deal, potentially becoming wealthier than BlackRock's CEO, Larry Fink. O'Hare, who owns nearly 80% of Preqin through Valhalla Ventures, is expected to gain around $2 billion from the acquisition. In addition to his role at Preqin, O'Hare's past ventures include co-founding Citywatch, another financial data service acquired by Reuters in 1998.

The legal aspects of this high-stakes deal are being managed by Skadden, Arps, Slate, Meagher & Flom on behalf of BlackRock, and Macfarlanes representing Preqin. The transaction, valued at approximately $3.2 billion in cash, is expected to close by the end of the year, pending regulatory approvals and closing conditions.

BlackRock's strategy aligns with a broader trend in the financial services industry, following significant acquisitions like S&P Global's acquisition of IHS Markit and the London Stock Exchange's purchase of Refinitiv. The company's expansion into private markets, highlighted by this acquisition, continues to support its $10.5 trillion asset management operations, emphasizing its focus on alternative investments including private equity and infrastructure.

The acquisition also signals a potential transformation in the private markets data industry, currently valued at $8 billion and projected to grow to $18 billion by the end of the decade. BlackRock CEO Larry Fink noted the significance of data and index formats in democratizing alternative investments, suggesting that the Preqin acquisition will serve as a critical element in this strategic vision.

As the financial landscape evolves, BlackRock's acquisition of Preqin marks a landmark moment, likely to influence market dynamics and competitive positioning in the financial data sector. This deal represents both a consolidation of BlackRock's vast capabilities and a forward-looking approach to harnessing data for more informed investment management.

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