The world’s largest asset manager reported its Q4 and 2023 results on Friday, and it’s positive news for the firm, with total revenues up 7% in Q423 against Q422, from US$4.3 billion to US$4.6 billion, operating margins tightened to 34.2%, and equities volumes up by a robust 5%, from US$1.7 billion to US$1.8 billion between Q4 2022 and Q42023. And then there is the recent US$12.5bn deal to acquire Global Infrastructure Partners, as the firm pivots towards alternatives in its bid to diversify. What does this mean for BlackRock going forwards?
Despite strong YoY Q4 growth, BlackRock’s full year revenue was flat, primarily driven by the negative impact of markets on average AUM, partially offset by higher technology services revenue.
However, CEO Larry Fink was bullish on the prospects for the firm: “Today, we are announcing two transformational changes in anticipation of the evolution we see ahead for asset management and the capital markets. The strategic re-architecture of our organisation will simplify and improve how we work and deliver for clients. And our acquisition of GIP will propel our leadership in the fast-growing market for hard-asset infrastructure.”
BlackRock reported US$289 billion of full-year net inflows, including US$96 billion in the fourth quarter of last year.
Chief financial officer Martin Small said flows were positive across active, index, and regions led by US$156 billion of net inflows from US clients. He said BlackRock has 70 products across the ETF and mutual fund ranges with more than US$1 billion in net inflows last year.
Looking ahead, Fink said: “We enter 2024 with strong momentum – $10 trillion in assets under management, accelerating flows, and an organisation positioned for the future.”
Blackrock generated “industry-leading” ETF net inflows of US$186 billion in 2023, representing 6% organic asset growth, led by US$112 billion in net inflows into our bond ETFs, Small said.
European ETF industry flows were up 70% year-on-year in 2023 and iShares had almost 50% of flow market share in the region at US$70 billion. Catalysts in the US such as the growth of fee-based advisors and model portfolios are beginning to take root in Europe.
The GIP deal consists of US$3 billion in cash and approximately 12 million shares of BlackRock common stock, with GIP taking 75% of the consideration in stock.
Fink said on the earnings call that the acquisition of GIP will make the firm the second largest private markets infrastructure manager with more than US$150 billion in total AUM.
He added that BlackRock is taking a long-term view of market forces that will drive outsized growth over the next decade including growing public deficits, a modernising digital world, advancing energy independence and the energy transition, which are driving the mobilisation of private capital to fund critical infrastructure.
“This is another truly transformational moment for BlackRock. Our firm is what it is today because we’ve taken a long-term view on what market forces will drive outsized growth for our clients and for our firm,” Fink said.
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