BlackRock Inc. attracted some of the world’s largest institutional investors and sovereign funds when a major stake was sold this month, illustrating chief Larry Fink’s connections with deep sources of capital in the U.S., Middle East and Asia.
Existing shareholders Wellington Management, Capital Group Cos. and Fidelity Investments were among those that bought shares when PNC Financial Services Group Inc. sold a $14 billion BlackRock stake, according to people familiar with the situation. Norway’s $1 trillion wealth fund and Singapore state investment firm Temasek Holdings Pte also increased their holdings, they said, asking not to be identified as the matter is private.
Fink’s extensive network in the Middle East was also on display, with at least four state investment vehicles from the region snaring a part of the stake sale. Abu Dhabi’s Mubadala Investment Co., the Kuwait Investment Authority, Qatar Investment Authority and Saudi Arabia’s Public Investment Fund all took part in the offering, according to the people.
The BlackRock co-founder has been a regular speaker at events organized by Saudi Arabia’s wealth fund. In April last year, Fink appeared at a Riyadh conference alongside the finance ministers of Saudi Arabia, Kuwait and Bahrain. Two months earlier, he was in Abu Dhabi for a meeting with ruler Mohammed bin Zayed Al Nahyan and signed a deal to invest in the emirate’s oil infrastructure
Shares of BlackRock closed Wednesday at $536.40 apiece, giving the company a market value of about $82 billion. That means investors who bought from PNC earned a 27% return in about two weeks.
A representative for KIA couldn’t be reached for comment. Spokespeople for BlackRock, PNC and the investors declined to comment. The names of the individual investors in the share sale haven’t been disclosed yet and will only come out in later filings.
Quick Sale
PNC’s sale is the second-largest secondary offering of a U.S. company on record, according to data compiled by Bloomberg. The strong interest from these deep-pocketed investors helped PNC close the deal quickly. The U.S. lender was able to sell the stock within four days of telling BlackRock about its plans, Fink said during a live-streamed interview on May 14.
The sale marked the end of a 25-year-plus relationship between PNC and the world’s largest asset manager. Pittsburgh-based PNC invested $240 million in 1994 when BlackRock was a six-year-old firm. The asset manager went public five years later at $14 a share.
The idea of PNC selling out of BlackRock was batted around the financial services industry for years. The size of the stake had been flagged as a point of risk in the U.S. Federal Reserve’s stress tests, according to people familiar with the matter.
Investment banks had been pitching for a role on the deal for at least a decade, the people said. When the underwriters -- Morgan Stanley, Evercore Inc. and Citigroup Inc. -- received a phone call from PNC’s management in early May informing them of the plans to sell, it was a long time coming. The timing made sense as companies around the world were looking to shore up balance sheets amid the Covid-19 pandemic.