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For BlackRock, private asset ownership suddenly seems a lot more attractive than public company agitation. On Tuesday, a consortium that includes the manager of $12tn in client assets acquired control of a pair of Panama Canal ports as part of a $22.8bn deal.
Last year, BlackRock bought Global Infrastructure Partners, a highly regarded operator of airports, roads and such, in an effort to become a powerhouse in alternative asset investing. That move now looks canny. Larry Fink’s company is now well placed as President Donald Trump jawbones foreign players — in this case Hong Kong conglomerate CK Hutchison Holdings — into selling their crown jewels to the US.
That is all the more fortuitous because BlackRock’s core business faces its own challenges. At the moment, managing funds that own small stakes in public debt and equity — while still an enormous, growing and profitable business — is much less fun, also courtesy of Trump.
Fink’s erstwhile ESG tilt has been cynically attacked as “woke”, for example, turning what once looked like a strength into a vulnerability for BlackRock. The asset manager has withdrawn from climate groups and toned down previous full-throated explanations of the pecuniary benefits of climate consciousness and social responsibility.
Such retreats have, alas, done little in the near term to mitigate attacks on the House of Fink. Staff at the US Securities and Exchange Commission have said that “engagement” meetings that fund managers such as BlackRock and Vanguard hold with portfolio company management teams may require more oversight, bringing such meetings to a temporary halt.
Meanwhile in Delaware, the state that dominates business incorporations, laws may be tightened to restrict shareholder litigation against corporate managers. That further hampers BlackRock’s ability to exert influence.
More reason, then, for Fink to put more effort into owning assets that he can parcel out to investors through fee-generating funds and products. And in that business, good relations with the White House become even more important. Trump, who has complained about Chinese influence over the Panama Canal, gave tacit approval for BlackRock’s deal, the Financial Times has reported.
Both sides win, in their way. CK Hutchison is presumably happy to rid itself of a problem. BlackRock gets even bigger in so-called alternative assets, which now tally about $400bn, with infrastructure as a key focus. If Fink cannot keep geopolitics out of his business, he has at least managed to turn them to his advantage.
Back in the mortal world, there is of course the question of price. Here, it looks like CK Hutchison got the better deal. Analysts at Citigroup reckon its 80 per cent interest in the Panama ports is really worth just $12.6bn. Shares in the Hong Kong conglomerate, founded and advised by local magnate Li Ka-shing, rose on Wednesday by the equivalent of $4bn. Political favour of the kind Fink increasingly enjoys comes neither easily nor cheaply.
sujeet.indap@ft.com
