BlackRock continues private markets push with ElmTree acquisition
BlackRock is acquiring ElmTree Funds, a net-lease real estate investment firm, that will be integrated into its new private markets business created after the HPS Investment Partners acquisition.
ElmTree, which has $7.3bn (£5.4bn) in assets under management, specialises in the commercial net-lease sector, with a focus on single tenant, build-to-suit real estate assets.
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Upfront consideration will be paid primarily in stock, with the potential for additional consideration subject to ElmTree performance over the next five years.
Additional financial details were not disclosed.
Once the deal closes, ElmTree will be integrated into Private Financing Solutions (PFS), the new platform created through BlackRock’s combination with HPS, a credit investment manager that it recently acquired.
BlackRock says that the addition of ElmTree will help PFS to scale its real estate offering and boost the long-term growth of the platform.
“Structural shifts in the real estate sector are creating new opportunities for private capital,” said Scott Kapnick, chairman of PFS executive office and chief executive of HPS.
“The combination of a premier triple-net investor with our leading private financing solutions platform will position us to capture these opportunities for our clients. ElmTree has the team, expertise, and relationships that will help drive growth and deliver differentiated investment solutions, and we are thrilled to welcome Jim and his entire team.”
ElmTree chief executive and founder James Koman will continue to lead the ElmTree investment strategies.
He said: “The net lease market is estimated at $1tn, and our continued belief in the industrial build-to-suit model is rooted in the mission-critical nature of this asset class.
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“Our specialised bricks-and-mortar expertise will be augmented by HPS’s ability to provide financing and other solutions that fuel the corporations and developers driving the economy forward. By joining HPS and BlackRock, we are better positioned to meet market demand and serve our partners by growing alongside them for the long term.”
Skadden, Arps, Slate, Meagher & Flom, Fried, Frank, Harris, Shriver & Jacobson, and Sidley Austin are acting as legal counsel to BlackRock and HPS.
Goldman Sachs & Co. served as financial advisor to HPS.
Berkshire Global Advisors served as financial advisor and Kirkland & Ellis acted as legal counsel to ElmTree Funds.
BlackRock has ambitious plans for its private markets business, as it looks to diversify from its historic public markets offering and achieve higher returns.
The world’s largest asset manager said in a presentation ahead of its investor day in June that it is targeting $400bn of cumulative fundraising in private markets between now and 2030, as part of a plan to boost total revenue to $35bn.
