BlackRock forms new real assets group

BlackRock has undergone a major restructuring of its management team that includes a merger of its infrastructure and real estate platforms under current head of infrastructure Jim Barry , according to an internal memo seen by Infrastructure Investor.

Barry's success in growing BlackRock's infrastructure business over the last couple of years – and BlackRock's desire to keep growing its infrastructure arm over the coming years – is said to have played an integral part in the asset manager's decision to promote him to head of the newly formed real assets group.

In addition to his new role as head of real assets, Barry will continue in his position as managing director of the BlackRock Infrastructure Investment Group (BIIG). The firm's real estate team is led by global head Marcus Sperber and global chief investment officer Simon Treacy.

BlackRock currently maintains $7.5 billion in investments and commitments in infrastructure, with the new real assets unit having a combined $29 billion of assets under management. In the memo, BlackRock explained that clients are increasingly viewing real assets as a distinct and more integrated asset class and said it wanted to be at the forefront of thinking and investing in the space in this way.

In a recent report for BlackRock's institutional investor clients prepared by The Economist Intelligence Unit, institutional investors are said to have a growing appetite for real assets. In the survey that informed the report, the majority of participating investors defined real assets as primarily consisting of infrastructure, real estate and commodities as well as timber and farmland.

Ninety-six percent of survey respondents reported active investments in real estate, 66 percent in infrastructure – the “newest and fastest-growing segment” – and 29 percent in commodities, with a median real asset allocation of 11 percent of total portfolios. The majority of respondents reported either currently having internal capacity to vet real asset investments or planning to build that capacity in the near term.

Nearly half of the survey participants indicated that they plan to increase their infrastructure allocations in the next 18 months. About 87 percent of respondents in the Americas cited macroeconomic considerations among their top three reasons to increase asset class allocations, compared with 31 percent in Asia-Pacific (APAC) and 41 percent in Europe, the Middle East and Africa (EMEA).

Increased returns were also a strong motivating factor for Americas investors when considering asset class allocations, whereas for EMEA and APAC investors, a common motivator was replacement or enhancement of current income. APAC investors also said they’ll look to infrastructure to rebalance portfolios, with EMEA investors seeking inflation protection.

Worth noting was that investors with ambitions to increase infrastructure allocations are far less interested in adding debt (38 percent) than they are equity (75 percent). Another interesting finding was that for these investors, emerging markets appear almost as attractive as developed markets, with nearly half (45 percent) expressing interest in emerging market brownfield and 23 percent not averse to greenfield.

“As we speak to investors globally, we are consistently struck by their varying objectives for infrastructure investment, and their determination to match investment types to those objectives,” said Barry in a statement attached to the report. “The idea of a one-size-fits-all infrastructure allocation is increasingly outmoded.”

As part of its overall realignment, BlackRock is unifying its global fixed-income business under veteran manager Tim Webb, who will work alongside newly appointed chief information officer Rick Reider. The firm also recently reshuffled the management team of the BlackRock Utility and Infrastructure Trust (BUI), its closed-end fund.