Aperio’s Customized Indexing Capabilities Enhance BlackRock’s Wealth Platform with Tax-Managed Equities, Factors, and ESG Strategies

BlackRock’s High-Touch Separately Managed Account Services Now Provide Whole Portfolio Solutions for Ultra-High Net Worth Advisors

BlackRock announced that it has entered into a definitive agreement to acquire Aperio from Golden Gate Capital and Aperio employees for $1.05 billion in cash. Aperio is a pioneer in customizing tax-optimized index equity separately managed accounts (SMAs) to reflect each client’s unique risk, tax, and personal values preferences.

For 20 years, Aperio has been innovating to deliver wealth managers capabilities that embrace the uniqueness of each investor and enhance after-tax performance. Aperio also pioneered individually customized ESG portfolios that enable investors to elevate the purpose of their wealth and make an impact on causes deeply important to them. Aperio’s high-touch consultative client service model focuses on ultra-high net worth households and institutions served by private banks and the fast-growing independent registered investment advisor (RIA) market. The U.S. retail and wealth SMA market totals approximately $1.7 trillion in assets and is growing at approximately 15% annually and 35% among RIAs. With over $36 billion of assets under management as of September 30, 2020, Aperio has outpaced the industry with an average annual organic asset growth rate of nearly 20% over the past five calendar years.

BlackRock is already a leading provider of SMAs for U.S. wealth management-focused intermediaries. The firm’s SMA franchise specializes in providing customized actively-managed fixed income, equity, and multi-asset strategies. The combination with Aperio will boost BlackRock’s SMA assets by roughly 30% to over $160 billion. More importantly, the transaction expands the breadth of personalization capabilities available to wealth managers from BlackRock via tax-managed strategies across factors, broad market indexing, and investor ESG preferences across all asset classes. The combination with Aperio will set a new standard for personalized whole portfolio solutions in the SMA market.

“The wealth manager’s portfolio of the future will be powered by the twin engines of better after-tax performance and hyper-personalization. BlackRock and Aperio, working together, will bring unmatched capabilities to meet these objectives,” said Martin Small, head of BlackRock’s U.S. Wealth Advisory business. “The combination will bring institutional quality, personalized portfolios to ultra-high net worth advisors and will create one of the most compelling client opportunities in the investment management industry today.”

“Aperio has been honored to earn the trust of the most demanding wealth managers by always putting investors’ interests first and partnering with advisors to solve the complexities of UHNW investors through research integrity and excellence in human-centric client experience. With BlackRock, we have found a like-minded fiduciary firm with long-standing roots in tax-efficient indexing, a commitment to sustainable investing, and Diversity, Equity & Inclusion, and a track record of delivering consultative whole portfolio solutions to wealth management intermediaries,” said Aperio co-heads, Liz Michaels and Ran Leshem. “We are excited to harness BlackRock’s capabilities and reach to keep innovating on behalf of an even larger base of wealth managers and institutional investors.”

BlackRock plans to operate Aperio as a separately branded, vertically integrated team within BlackRock’s U.S. Wealth Advisory business. Aperio will retain its investment, business development, client service, and ESG-SRI processes under the leadership of Ran Leshem and Liz Michaels, who will become co-heads of the Aperio team upon joining BlackRock, a transition already announced last summer by Aperio. Current Aperio CEO, Patrick Geddes, will maintain his role as Aperio’s Chief Tax Strategist and become a BlackRock senior advisor, focusing on broadening portfolio construction research and tools for taxable investors across asset classes.

“We are thrilled to welcome the Aperio team to BlackRock,” said BlackRock’s Chief Client Officer, Mark McCombe. “We look forward to bringing Aperio’s innovative mindset in financial services to BlackRock and drawing on the team’s decades of experience to expand our offerings to even more advisors and their clients. This transaction deepens our presence in the San Francisco area and reflects the critical importance to BlackRock of tapping the innovation taking place on the West Coast of the U.S.”

Rob Little and Dan Haspel, Managing Directors at Golden Gate Capital, said, “During our highly successful partnership with the world class team at Aperio, the company significantly expanded its client base and capabilities, while continuing to operate with an unparalleled focus on customized solutions for the new institutional market. We are very excited for Aperio as they embark on this next chapter with BlackRock, who is the perfect partner to bring Aperio’s extreme fiduciary focus and expertise to a global audience.”

BlackRock’s acquisition of Aperio will be funded from existing corporate liquidity and is anticipated to close in the first quarter of 2021. Although minimally dilutive to earnings per share, the transaction is not expected to be dilutive on a cash basis.

Source: BlackRock