BlackRock Inc said on Monday it is hiring two specialists from Goldman Sachs Group Inc to bolster its private equity business in New York, according to a staff memo.
Steve Lessar and Konnin Tam will join the world’s largest asset management company from Goldman Sachs this summer, according to the document, which was seen by Reuters.
Each will be responsible for expanding BlackRock’s role within a business that effectively enables investors in private companies and funds that invest in such firms to resell their stakes to other institutions. Normally, that money is locked up for years.
This market for “secondary” private capital saw a record $58 billion in transaction activity in 2017, according to investment bank Greenhill & Co Inc, with money chasing better returns than exist within public markets.
“Our plan is to place Steve and Konnin at the core of a team that will expand our existing offerings and make BAI the leader in this business,” said the memo, using the acronym for BlackRock Alternative Investors, a group that oversees largely private investments ranging from real estate to hedge funds.
BlackRock is known for more widely offered funds that invest in publicly traded stocks and bonds.
Yet Chief Executive Larry Fink has made it a priority to compete in private markets, too, against Goldman Sachs and other rivals better known for those sorts of investments, such as Blackstone Group LP. BlackRock was spun off from Blackstone more than two decades ago.
Fink told Wall Street analysts earlier this month that he expects so-called illiquid alternative investments, which include private equity and typically come with higher fees than its other funds, to “be one of the more significant” drivers for BlackRock’s business over the next few years.
Alternatives represent a fraction of BlackRock’s assets under management, growing at a slower rate than its other businesses, yet they account for outsized fee revenue.
Photo: The BlackRock logo is seen outside of its offices in New York City, U.S., October 17, 2016. Reuters/Brendan McDermid/File Photo