All investors, including family offices, increasingly focus on private markets in the ever-evolving landscape of alternative investments. With allocations to alternative assets on the rise according to almost every report, the relevance of data cannot be overstated in this traditionally opaque space. BlackRock’s recent announcement of its acquisition of Preqin, a leading provider of alternative markets data, is a development that promises to reshape the investment strategies of family offices worldwide. Besides the immediate benefits, this might signal that other types of investor and investment data will also be in high demand in the future.
The Big Data Revolution in Alternative Investments
BlackRock’s agreed $3.22 billion acquisition of Preqin is poised to catalyse a significant shift in how private markets are understood and navigated. Preqin’s comprehensive data on private equity, real estate, hedge funds, and infrastructure will enable BlackRock to create indexes for private markets, akin to those in public markets. As Larry Fink, BlackRock’s Chairman and CEO, recently stated, “Just as index has become the language of public markets, we envision bringing the principles of indexing to the private markets.”
This move underscores a broader trend: data is becoming a cornerstone of investment strategy. For family offices with investments in alternative assets, having access to detailed, reliable data is invaluable. It allows for better-informed decisions, risk management, and performance benchmarking. By acquiring Preqin, BlackRock is making a big play in private market data that could be relevant for pricing, sourcing, secondaries, risk management and more.
Future Opportunities: The Intersection of Technology and Private Markets
The acquisition also highlights future opportunities that lie at the intersection of technology and private markets. As Sudhir Nair, Global Head of Aladdin, noted, “Together with Preqin, we can make private markets investing easier and more accessible while building a better-connected platform for investors and fund managers. This presents a substantial opportunity for Aladdin to bridge the transparency gap between public and private markets through data and analytics,” said. The integration of Preqin’s data with BlackRock’s Aladdin platform is a strategic move to enhance data collection, create benchmarks, and offer comprehensive tools for asset allocation and performance analysis.
Harnessing advanced analytics and seamlessly managing both public and private portfolios on a unified platform will be incredibly valuable. Artificial intelligence will further support this trend, making the investment landscape more navigable and efficient. As private markets become less opaque, family offices will benefit from greater transparency and education, crucial for democratizing alternatives.
Growth Synergies and Market Consolidation
The acquisition of Preqin is not just a standalone event; it is part of a broader strategy for BlackRock. The firm’s recent acquisition of Global Infrastructure Partners earlier this year and its integration of eFront highlight a concerted effort to build an end-to-end private-market technology ecosystem.
Market consolidation will also play a crucial role in this transformation, as the private-markets landscape is currently fragmented and populated by numerous small-scale local and niche boutiques. Consolidation will facilitate faster and easier access to data, making the ambition of creating a comprehensive index more achievable.
Navigating Competitive Dynamics
One of the challenges highlighted during the analyst call was the potential discomfort of Preqin’s existing clients, many of whom are BlackRock’s competitors. However, Rob Goldstein, BlackRock’s COO, reassured that the integration would prioritise client benefits, maintaining Preqin as a standalone service while expanding the reach of BlackRock’s Aladdin platform.
“Every acquisition has been an opportunity to strengthen our capabilities for clients—and in fact, we have been a client of Preqin for many years, and we look forward to welcoming the talented Preqin team to BlackRock,” said Goldstein.
Goldstein also noted that they see data powering the industry across technology, capital formation, investing, and risk management. The promise of safeguarding data and ensuring transparency in how it is used will be critical to success.
Positioning for the Future
The acquisition of Preqin is a strategic milestone for BlackRock, reinforcing its commitment to placing private markets at the core of its investment and technology strategy. For family offices, this development presents an opportunity to enhance their investment approach with robust data and sophisticated tools. As BlackRock continues to drive innovation in private markets, family offices can look forward to a future where data-driven insights and technology pave the way for more informed and effective investment strategies.
In summary, BlackRock’s acquisition of Preqin is more than a business transaction; it is a step towards transforming the private markets landscape. For family offices, it signifies a future where data, technology, and strategic insights converge to unlock new investment opportunities and drive growth in the realm of alternative assets.
