BlackRock announced it is buying alternative investment management software company eFront for $1.3 billion. Specifically, BlackRock is acquiring 100% of the equity interests in eFront all in cash from private equity firm Bridgepoint and eFront employees. By combining eFront with Aladdin, BlackRock’s investment operating platform is set to create a new standard in investment and risk management technology.
eFront, a comprehensive technology solution for managing the alternatives investment lifecycle ranging from due diligence, portfolio planning, and risk analysis, serves over 700 clients in 48 countries. And BlackRock’s Aladdin investment operating platform is used by more than 225 institutions around the world. eFront was originally founded by Olivier Dellenbach in 1999 and it is based in Paris.
“Technology and illiquid alternatives are two pillars of BlackRock’s growth, and this transaction provides a unique opportunity to accelerate our positioning in both,” said BlackRock’s chairman and CEO Larry Fink in a statement. “We’re particularly excited about eFront’s global footprint, including its headquarters in Paris, which is a key market on the continent for BlackRock. As a global asset manager, we are increasingly focused on understanding the unique needs of clients in each community where we operate. eFront immediately deepens our presence and technology capabilities in France, Europe and across the globe.”
The eFront transaction is going to be funded with a combination of existing corporate liquidity and debt. And separate from the eFront acquisition, BlackRock also entered an agreement to repurchase about 3.1 million of its shares at a per share price of $412.84 under its existing repurchase program.
“eFront vastly expands Aladdin’s alternatives capabilities and further distinguishes it as the most comprehensive investment operating platform in the world,” added BlackRock COO Rob Goldstein. “In addition to the benefits eFront will bring to Aladdin clients, the transaction also enhances BlackRock’s own alternatives investment platform and advances the company’s goal of using technology to strengthen its leadership position in the illiquid investment space and providing whole portfolio solutions to clients.”
Since alternatives are going mainstream, investment managers will need to find ways to seamlessly manage portfolios across public and private asset classes on a single platform. And eFront will extend Aladdin’s end-to-end processing solutions offering in alternative asset classes — which will enable clients to get an enterprise view of their portfolio. Goldstein pointed out that there are $9 trillion in alternative assets under management in the industry today and clients are incorporating them into their investment strategies at a rapid pace.
“Aladdin has long set the standard for investment and risk management technology and eFront is excited to be joining the market leader,” explained eFront CEO Tarek Chouman. “BlackRock’s dynamic platform and global reach will allow us to help even more clients with their alternative asset needs and greatly enhance the value proposition we offer our clients today.”
By offering eFront’s leading capabilities in alternatives to Aladdin Community through BlackRock Solutions, it will offer BlackRock’s clients access to a “whole portfolio” approach. eFront’s 700 employees will be joining BlackRock as the companies combine their platforms.
Bridgepoint partner Xavier Robert pointed out that eFront has been a high growth business which went through a period of significant transformation to become a market leader in software for the alternative asset management industry, which is “now poised for further growth under BlackRock’s ownership.”
BlackRock’s Aladdin platform combines sophisticated risk analytics, exposure, and performance analyses with comprehensive portfolio management, trading, compliance, and operational tools on a single platform. With Aladdin, BlackRock is able to offer clients the same technology and intellectual capital that BlackRock uses for managing investments day-to-day.
