BlackRock’s Larry Fink welcomes rise in Gulf clients

Reuters/Lucas Jackson

BlackRock is attracting more investors from the Middle East, the CEO of the world’s largest asset manager told analysts this month.

The US-based firm established a wholly-owned Saudi subsidiary in 2018, opened an office in Riyadh in 2019 and in February 2022 received approval from the market regulator to start managing investments and operating funds in the kingdom.

Its other offices in the Middle East and Africa are in Dubai, Tel Aviv and Cape Town.

Larry Fink, chairman and CEO of BlackRock, said: “We’re not only just seeing clients in the old geographic footprint, we’re seeing new clients expanding geographically. More and more client flows now in Europe, much more in the Middle East.” 

• PIF and BlackRock to explore Gulf infrastructure projects
• Gulf wealth funds look to snap up ‘cheap’ assets in West

The Americas is home to 67 percent of BlackRock’s assets under management, with Europe, Middle East and Africa (Emea) representing 25 percent and Asia-Pacific 8 percent. 

BlackRock’s net flows from Emea were $73 billion last year, of which $32 billion were in the final three months of 2022. That compares with net flows of $119 billion from Emea in 2021, of which $5 billion were in the fourth quarter of that year. 

In November Saudi Arabia’s state-owned Public Investment Fund signed a memorandum of understanding with BlackRock to “explore” infrastructure investment opportunities in the Middle East that will focus on the kingdom.

These could span various sectors such as energy, water, transport and communications. 

BlackRock will create a specialist, Riyadh-based infrastructure team, according to a statement on Saudi’s official news agency. 

“PIF and BlackRock plan to collaborate to attract regional and international investors to participate in investment projects, promote foreign direct investments in Saudi Arabia, add positive value to the Saudi economy and market, and enable the transfer of knowledge and skills,” the statement adds. 

BlackRock’s Saudi subsidiary generated revenue of 32.6 million riyals ($8.69 million) in 2021 – the most recently available results – up from 30.9 million riyals a year earlier.

As well as wooing Middle East investors, BlackRock has also acquired sizeable assets within the region. 

In 2021 a BlackRock-led consortium signed a $15.5 billion sale and leaseback deal with Saudi Aramco to acquire the energy producer’s gas pipeline network, while in 2019 BlackRock and its rival KKR joined forces to buy a $4 billion, 40 percent stake in Adnoc’s (Abu Dhabi National Oil Co) oil pipeline subsidiary. 

Last year was tough for asset managers following a sustained slump in equity and bond markets. The benchmark S&P 500 stock index fell 19 percent last year, while the MSCI emerging market, Europe, world and Asia Pacific share indexes all suffered double-digit declines in 2022. 

BlackRock’s full-year 2022 net profit was $5.18 billion, down from $5.90 billion a year earlier as its investment advisory performance and administration fees and securities lending revenue all fell. 

The company had $8.59 trillion of assets under management (AUM) as of December 31, 2022, down 14 percent year-on-year. 

In terms of asset class, 51 percent of BlackRock’s assets under management are equities, 30 percent are fixed income, 8 percent multi-asset, 3 percent are classed as “alternatives” and 8 percent is in cash. 

BlackRock will cut 500 jobs, or about 3 percent of its workforce, Reuters reported last week.