BlackRock Inc, the world’s largest asset manager, is restructuring its private credit division in a bid to close the gap with rivals in the rapidly expanding market, with the establishment of a new division Global Direct Lending led by Stephen Caron, according to a repot by Bloomberg.
Caron, currently leads the European middle-market private debt division.
As part of the overhaul, 20-year veteran Jim Keenan, BlackRock’s Global Head of Private Debt, will be leaving the company next year, along with Raj Vig, Co-Head of US Private Capital.
Despite overseeing a colossal $10.6tn in assets, BlackRock has lagged behind smaller competitors such as Apollo Global Management Inc and Ares Management Corp, which have established themselves as leaders in the booming private credit sector.
The report quotes Rich Kushel, head of BlackRock’s portfolio management group, as saying in a memo issued on Monday, that: “Private credit is one of the firm’s top priorities”, adding that the new structure will foster better collaboration and strengthen BlackRock’s ability to expand its capabilities while maintaining the investment strategies unique to each part of the business.
The creation of the direct-lending unit follows growing demand from investors, Kushel explained, with the aim being to “accelerate our ambition to be a leader in direct lending and growth debt globally.”
Currently, BlackRock manages approximately $35bn in direct lending assets, a fraction of the $10.6tn it oversees. Its total private debt assets amount to $86bn. In contrast, Apollo manages over $500bn in credit, and Ares has more than $320bn in credit assets as of mid-2023.
Historically known for its dominance in stock and bond index funds, BlackRock is now focusing on private assets, which although accounting for only 1.3% of the firm’s total assets, generated 6.4% of overall revenue from management and performance fees in the second quarter. The company aims to double its annual revenue from private assets to around $2bn by 2028.
