miércoles, 1 de mayo de 2019

miércoles, mayo 01, 2019

BlackRock Launches Sweeping Overhaul in Bid to Boost Growth

Wall Street giant installs new leaders at key division, reorganizes sales staff and shifts roles for directors

By Dawn Lim



Two potential successors to BlackRock CEO Laurence Fink, seen here in 2018, were given expanded responsibilities. Photo: Mark Kauzlarich/Bloomberg News


BlackRock Inc. BLK 2.58%▲ is undertaking its most sweeping organizational overhaul in a decade as the Wall Street behemoth wrestles with how to keep its empire growing.

The world’s largest money manager is installing new leaders at a key investment division, reorganizing sales staff, shifting some two dozen directors into different roles and handing expanded responsibilities to two contenders in the race to succeed Chief Executive Laurence Fink.

These moves are among several announced in an internal memo Tuesday morning. BlackRock has regularly made tweaks to business over time but hasn’t undergone a change at this scale in years, said a person familiar with the matter.

The New York firm grew into a $6 trillion money manager during the bull market of the past decade on the back of funds that replicated public markets cheaply and were easy to trade. It provides everything from exchange-traded funds to stockpicking strategies powered by algorithms to private equity and technology for Wall Street.





But talks around how the firm can strengthen some businesses and find ways to reposition itself have intensified recently as BlackRock has pushed into new areas. The company has also faced slowing net inflows and a price war that is driving fees of basic stock-and-bond funds lower.

The firm, known for constantly moving staffers into new roles, began planning for broad changes last year, the person said. The firm got an additional push during the fourth quarter when a market rout ate into BlackRock assets. BlackRock already disclosed it was cutting 500 jobs this year.

Changes in the markets and asset management industry “represent the biggest opportunity in a decade to differentiate BlackRock—but only if we are willing to be bold and decisive,” Mr. Fink, the firm’s chief executive, and President Rob Kapito said in Tuesday’s memo.



Some of the biggest changes will be in the firm’s alternatives business, which wagers on energy pipelines, loans and other nontraditional assets. It is key to helping the firm capture the wealth of big investment institutions that is flowing from stock markets into private markets.

Currently, the alternatives business is a small part of BlackRock’s profit engine: running 2% of assets and generating roughly 9% of revenue in 2018. Some executives believe the business hasn’t grown as fast as they hoped, said people familiar with the matter, even as BlackRock raised a record $16 billion for illiquid bets last year.

A new private-equity fund recently raised an initial $2.75 billion in commitments but is behind schedule. The alternatives group has cycled through three sets of leadership changes in the past four years.

Edwin Conway, who previously led BlackRock’s interactions with institutional clients, will take over day-to-day management of the alternatives business.

Mr. Conway succeeds David Blumer, who will take an advisory role and leave the firm’s leadership committee. Mr. Blumer, whom staff called a cerebral boss, split his time between Switzerland and New York. He will now spend less time in the firm’s headquarters, the memo said.

The other person leaving the firm’s executive committee is Richie Prager. Mr. Prager, who joined the company 10 years ago and leads the firm’s trading, liquidity and securities lending teams, will be retiring in July.

At the alternatives group, Jim Barry, the firm’s real assets head who leads real estate and infrastructure teams and is known for shaping its wind-and-solar-farm portfolio, will become investment chief. It marks the first time in two years the firm has installed an investing boss atop the group.

The alternatives group will also have more than 50 dedicated sales staff reporting to it for the first time. In the past, the group had often been reliant on sales teams that were also selling other products, putting it at a disadvantage.

The change is one part of a reorganization of the firm’s more than 750-person sales staff focused on pensions, endowments and large institutions. In addition, regional heads will be directing their own sales teams targeting these big customers.

The decision will concentrate more power in the hands of overseas regional bosses such as Geraldine Buckingham, who heads operations in the Asia Pacific, where BlackRock is planning a big China expansion.

BlackRock in the memo said the changes were aimed at making it more responsive to customers around the world. Among the shifts of roughly two dozen directors announced Tuesday, a handful will take on new roles as country and regional heads.

The changes announced Tuesday don’t solve one big question that remains at BlackRock: Who will take over for Mr. Fink when he eventually steps down? There are roughly half a dozen contenders in line to be the top boss.

Among the group of potential successors, two men will take on new duties.

Mark McCombe’s role overseeing the Americas will be split with Mark Wiedman, recently named head of the firm’s international business and corporate strategy. Mr. McCombe will run operations in the U.S. and Canada while Mark Wiedman will be in charge of Latin America, alongside Asia Pacific, Europe, Middle East and Africa.

Meanwhile Mr. McCombe is also assuming wider responsibilities over several sales teams, including those who deal with the world’s largest investment institutions and gatekeepers.

They aren’t the only ones the firm is grooming for the top job. Other potential candidates include Rob Kapito, active-equities head Mark Wiseman, Chief Operating Officer Rob Goldstein and fixed income chief Rich Kushel, according to people familiar with the matter.

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