BlackRock Inc., the world’s largest asset manager, hired Credit Suisse Group AG’s Andy Stewart to co-head the unit that runs real estate, hedge fund and private equity fund-of-funds investments along with Matthew Botein, according to a memo sent to employees.
Stewart will lead the business management and strategic growth of BlackRock Alternative Investors, the New York-based firm said in today’s memo. Stewart, 38, will report to President Robert Kapito and Chief Operating Officer Charles Hallac. Botein will take on the additional role of chief investment officer for alternatives, a broad category that includes assets whose returns aren’t correlated with traditional stocks and bonds.
BlackRock has expanded into private equity, real estate, energy and hedge funds as investors seek assets that provide protection from global market swings. It has built its alternatives business through acquisitions, adding private equity with its purchase of Merrill Lynch & Co.’s investment unit in 2006 and the hedge fund-of-funds business from Quellos Group LLC in 2007. The firm in 2010 organized its alternative products into a single group led by Botein. The unit manages about $110 billion of BlackRock’s $3.79 trillion in assets.
“Since establishing BAI in mid-2010 to centralize and advance our alternative-investment efforts, our focus is paying off, with revenues increasing 11 percent in 2012,” Kapito and Hallac said in the memo.
BlackRock will create a new division within the unit called the alternative-solutions group, which will develop risk analytics for clients of BlackRock Solutions, the group that advises financial institutions and governments on hard-to-value assets, according to the memo. Botein, who worked at private-equity firm Blackstone Group LP and hedge fund Highfields Capital Management LP before joining BlackRock in 2009, will be the lead portfolio manager for that group, which will be led by Nugi Jakobishvili.
BlackRock’s alternatives unit includes investments in real estate, infrastructure, structured products such as collateralized loan obligations and funds of funds that farm out money to private equity and hedge-fund managers. BlackRock today named Carl Eifler as head of its direct hedge-fund group, which isn’t part of the alternatives unit. Eifler will report to Quintin Price, BlackRock’s head of alpha strategies, and Ken Kroner, head of multi-asset strategies.
BlackRock plans to exit the direct private-equity investing business as it focuses on its fund-of-funds unit, a move that will lead to the departures of Nathan Thorne, George Bitar and Mandy Puri, said Brian Beades, a spokesman. The firm had hired the former Merrill Lynch team in 2011.
“We had a very strong direct private-equity team, but given our clients are looking to us for other fund-of-fund solutions, we are going to transition out of the direct PE business,” Beades said in an e-mail.
BlackRock last year acquired the fund-of-funds unit from Swiss Re Ltd., which invests client money in private-equity partnerships. That acquisition helped BlackRock double assets in private-equity funds-of-funds to $15 billion.
Chief Executive Officer Laurence D. Fink said during a conference call with analysts and investors on Jan. 17 that BlackRock expects to see growth in appetite for alternative products and funds that provide a stream of income. The firm has also introduced hedge-fund-like products for retail investors, he said. Such retail products have attracted $1 billion in cash since the first of them was launched in 2011.
At Credit Suisse, Stewart was responsible for developing and expanding the “liquid alternatives business,” which included hedge funds, fund-of-funds, index products, credit and commodities. Before joining Credit Suisse in 2010, Stewart was president and chief operating officer in the U.S. for Man Investments.