BlackRock Inc. (BLK) Tuesday announced a definitive agreement to acquire Swiss Re Private Equity Partners AG - the European private equity and infrastructure fund of funds franchise of reinsurer Swiss Re (SSREY.PK). The deal would see the U.S. asset manager nearly double its client commitments.
Matthew Botein, Managing Director and Head of BlackRock Alternative Investors, said, "In an environment where yields are low and volatility is high, clients around the world are embracing alternatives which offer higher return potential and the ability to mitigate risk."
The deal is expected to close by the end of the third quarter. Terms of the all-cash transaction were not disclosed. BlackRock said the deal would be neutral-to-modestly accretive to its 2012 earnings.
Swiss Re Private Equity operates from Zurich, Hong Kong, New York and Bratislava. It had $7.5 billion in total commitments at May 31, including a significant commitment from Swiss Re as it invested alongside its clients.
Swiss Re Private Equity will be integrated with BlackRock's existing private equity fund of funds group - BlackRock Private Equity Partners. The deal expands the BlackRock fund's investments into infrastructure investing, widens its European and Asian footprint, and establishes the unit's presence in Switzerland.
With around $15 billion in client commitments, the unified platform brings together a strong line-up of complementary products. The team will invest in primary funds, secondaries and direct co-investment opportunities through core fund of funds, direct co-investment programs and other offerings.
Russell Steenberg, Managing Director and Head of BlackRock Private Equity, will lead the combined unit. Christian Hinze, Chief Executive Officer of Swiss Re Private Equity, will join BlackRock as deputy head of the combined business.
The investment strategy of either business's existing offerings is expected to remain unchanged. Each of them will continue to be managed by members of their existing portfolio management teams.
BLK closed on Monday at $169.63, down $0.19 or 0.11 percent, on a volume of 853,254 shares.
Swiss Re settled up 0.92 percent in Zurich at 60.10 Swiss francs on a volume of 849,700 shares.
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