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February 21, 2006 at 07:00 PM
NEW YORK (HedgeWorld.com)–Hedge funds may constitute a minuscule portion of the newly combined asset management businesses of Merrill Lynch Investment Managers and BlackRock Inc., but the two could each see those businesses grow from greater distribution.
While Merrill is known for its equity offerings and BlackRock for its fixed-income prowess, together they will be able to offer a wide variety of investment choices to institutional and retail clients.
The new company slated to operate under the BlackRock name will total US$992 billion in assets under management, of which US$38 billion will be in alternative investments such as private equity, real estate and hedge funds.
While officials didn’t peg an exact figure for hedge fund assets under management, it’s likely to total less than US$10 billion and essentially will be the culmination of a handful of acquisitions in recent years.
BlackRock is one of the most well-known firms in the fixed-income world, so it may come as no surprise that the company made its initial foray into hedge funds managing fixed-income portfolios that as of 2003 totaled US$1.5 billion.
In 2002, BlackRock purchased a US$100 million long/short equity manager called Cyllenius Capital Management LP. The following year, officials bought a majority interest in HPB Management LLC, a fund of hedge funds managed by Howard P. Berkowitz that ran US$150 million. Between 2003 and 2005, BlackRock through its acquisition of HPB launched four funds of hedge funds.
Merrill Lynch in 1997 bought Mercury Asset Management, a U.K.-based firm that offered long/short equity products. Since then, the firm has branched out to offer a variety of hedge funds and structured offerings catering mainly to institutional investors.
