With the new acquisition of BlackRock, asset managers will push one step up to the private market. The news The Asset Management Giant announced on Monday its agreement to purchase Elmtree Funds, a real estate investment company that manages approximately $7.3 billion in assets. Elmtree, which leasing commercial property to single-tenant tenants, will be merged into a new group of BlackRock called Private Financing Solutions. The PFS Unit has a private credit manager HPS investment partner that became part of BlackRock last week after the $12 billion acquisition was shut down. “Our expertise in brick and Mortal is enhanced by HPS’s funding capabilities and the ability to provide other solutions to businesses and developers that drive the economy forward,” said James Koman, founder and CEO of Elmtree, in a statement. HPS CEO Scott Kapnick added that “structural changes in the real estate sector are creating new opportunities for private capital.” The acquisition is expected to close in the third quarter of 2025 and is subject to regulatory approval. BlackRock shares rose conservatively on Monday, hitting a high of nearly $1,087 each following the news. Stocks were beating the broader market, but fell on Monday after finishing on a record last week. Big Picture This is BlackRock’s latest attempt to expand its portfolio of private assets, one of the hottest areas of finance. For years, BlackRock has been known for its popular indexing business, managing trillions of dollars and making up a significant portion of its revenue. The company is highly profitable as an ETF industry leader through funding from the ISHARES family, but its management is trying to reform BlackRock and diversify its revenues into other sectors. Transactions are a large part of this. Since its launch in 2024, the company has spent more than $28 billion on private market acquisitions. In addition to HPS, BlackRock also purchased alternative data provider PREQIN and infrastructure investment company Global Infrastructure Partners. With the completion of HPS, all three companies have become part of BlackRock. During the day of BlackRock investors, President Rob Capito described 2024 as one of the most “transformative” periods in the company’s history. He also spoke optimistic about future growth drivers, such as the private market. “The Best of BlackRock is still ahead of us,” Kapito told investors in June. By 2030, BlackRock aims to be a private market and technology company that accounts for at least 30% of its revenue, starting from the fifth or lower end of last year. The performance bottom line from the beginning of the year to acquire BLK YTD MOUNTANE BLACKROCK (BLK) Elm Tree Fund is not a transaction that moves the needle for BlackRock’s revenue, but I like what it says about the company’s strategic focus. Consideration: Compared to Elmtree’s $7.3 billion assets, BlackRock manages more than $11.5 trillion in assets. (On the contrary, that means that, given the size of the transaction, we are not worried about dilution from all-share transactions either.) Nevertheless, the venture highlights that management is targeting a rapidly growing world of private markets, particularly commercial real estate. I love the expansion of the private market as BlackRock’s revenues are even more diverse. You can see that BlackRock is heavily influenced by stock market volatility when it is less dependent on the ETF business. There are already signs that other acquisitions are beginning to pay off. For example, Preqin added about $20 million to revenue in the first quarter of 2025 (ownership for less than a month), contributing to a 30% increase in BlackRock’s annual contract value yearly. Investors will take a new look at Preqin’s performance and the entire BlackRock on July 15th. (Jim Cramer’s Charitable Trust is a long blk. See the full list of stocks here.) As a CNBC Investing Club subscriber with Jim Cramer, you will receive trade alerts before Jim makes a transaction. Jim waits 45 minutes after sending a trade alert before purchasing or selling stocks in the Charitable Trust portfolio. If Jim talks about stocks on CNBC TV, he will wait 72 hours after issuing a trade alert before running the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with the disclaimer. Due to receiving information provided in connection with the Investment Club, there is no obligation or obligation of the fiduciary. No specific outcomes or benefits are guaranteed.
