BlackRock to Take Stake in Owner of Sports Illustrated, Nine West
August 11 2019 - 11:46AM
Dow Jones News
By Miriam Gottfried and Cara Lombardo
BlackRock Inc. is poised to become the largest shareholder of
the company that owns brands including Sports Illustrated, Nine
West and Aéropostale in the first deal for the investment giant's
new private-equity fund, according to people familiar with the
matter.
BlackRock is taking a stake in Authentic Brands Group LLC that
values the closely held brand development, marketing and
entertainment company at more than $4 billion including debt, the
people said.
It couldn't be learned how big of a stake BlackRock is taking
but it's set to replace private-equity firm Leonard Green &
Partners as Authentic Brands' largest shareholder. Leonard Green
and other shareholders, including private-equity firms General
Atlantic and Lion Capital LLP, will remain invested but will sell
down their stakes to make room for BlackRock, the people said.
Authentic Brands' management, led by Chief Executive Jamie
Salter, will also continue to own a significant stake, the people
said.
BlackRock, the world's biggest money manager, has been trying to
diversify away from exchange-traded and index funds, which
comprised two-thirds of its roughly $6 trillion in assets and were
responsible for about 40% of its revenue in 2018, and into business
lines that allow it to lock up money for longer and charge higher
fees.
Long Term Private Capital, as the BlackRock private-equity fund
is known, was designed to emulate sovereign-wealth funds and other
such pools by allowing its managers to hold bets for as long as
they desire. The model sets it apart from the majority of
private-equity funds, which are required to sell off assets and
return capital to investors within a set period of time.
But the experiment has been slow to get off the ground, in part
because BlackRock began pitching it to investors before a full team
was in place to staff it, The Wall Street Journal has reported. The
firm, which set out last year to raise at least $12 billion, said
in April it had accumulated $2.75 billion.
Other big asset managers, drawn to the higher fees and returns
private equity has traditionally offered, are watching BlackRock's
venture closely. Vanguard Group recently had discussions with a
handful of private-equity firms as the indexing giant weighs
whether to partner with them to offer their funds to its investors,
the Journal has reported.
Colm Lanigan, a BlackRock managing director and a senior
official at Long Term Private Capital, has a longstanding
relationship with Authentic Brands and led the deal, for which
there was no auction process, one of the people said. Mr. Lanigan,
who joined BlackRock earlier this year, previously led North
American private-equity and built the principal-investing business
at sovereign-wealth fund Abu Dhabi Investment Authority, or ADIA,
which is a cornerstone investor in the BlackRock fund.
Founded in 2010 by Mr. Salter, Authentic Brands owns and
licenses a global portfolio of 50 entertainment and lifestyle
brands responsible for $9.3 billion in annual retail sales. The
company, which has roughly doubled its sales and earnings over the
past two years, has high margins and considerable visibility into
future revenue, making it a good fit for the long-term strategy,
people familiar with the matter said.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com and Cara
Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
August 11, 2019 11:31 ET (15:31 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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