BlackRock to buy real estate firm MGPA

Asset manager aims to expand its property business in Europe and Asia-Pacific

PUBLISHED : Wednesday, 22 May, 2013, 12:00am
UPDATED : Wednesday, 22 May, 2013, 4:03am

BlackRock, the world's largest asset manager, agreed to buy private-equity property investment advisory firm MGPA for an undisclosed amount to expand real estate business in the Asia-Pacific region and Europe.

MGPA manages about US$12 billion, focusing on real estate funds management, co-investments and separate-account mandates for institutional investors, BlackRock said yesterday. The transaction is expected to close in the third quarter and won't materially affect BlackRock's earnings per share, the New York-based firm said.

BlackRock, led by chief executive Laurence Fink, has expanded into private equity, real estate, energy and hedge funds as investors seek to diversify beyond stock and bond funds. MGPA employs 220 people in 13 offices in the Asia-Pacific region and Europe, including cities like Shanghai, Kuala Lumpur and Warsaw.

"The addition of MGPA to BlackRock is an important step in the evolution of our Asia-based investment capabilities and is aligned with the growth of our Asia-Pacific franchise," said Mark McCombe, BlackRock's Asia-Pacific chairman.

The acquisition will fill a void for BlackRock in the region with fast economic growth and an expanding middle class, McCombe, a former HSBC executive who joined BlackRock in September 2011, said yesterday.

BlackRock's US$13 billion existing real estate investment business is focused on the US and Britain, he said, adding that the money manager doesn't have such a team or investments in Asia.

In contrast, about two-thirds of MGPA's assets have been deployed in Asia, where the firm has made about 130 investments over the years, McCombe said.

MGPA is also an attractive opportunity because of its high- quality management team, McCombe said. BlackRock plans to retain MGPA's entire team, he said. John Saunders, MGPA's Asia chief executive, will remain in the role, he added.

The expanded real estate business will cater to pension and sovereign wealth funds as well as family offices and private banks, McCombe said. Insurance companies are also looking for longer-duration assets to match their liabilities, he said.

BlackRock's clients are looking to deploy more capital to alternative investments such as private equity and real estate in addition to products that seek to profit from taking market risks amid the prevailing low yields on bonds and swings in equities historically, McCombe said.

McCombe said he sees property investment opportunities in Southeast Asia in addition to Japan. Investors have to be very selective as they navigate China's massive market, he said.

BlackRock built its alternatives business through acquisitions, adding private equity with its purchase of Merrill Lynch's investment unit in 2006 and the hedge fund-of-funds business from Quellos Group in 2007. Last year, the firm bought a fund-of-funds unit from Swiss Re, which invests client money in private-equity partnerships.

BlackRock managed US$3.9 trillion of assets globally at the end of March.

MGPA has operated in Asia since 1999, it said in a statement last month.