BlackRock Liquidates PPIP Fund Earning U.S. Treasury 24%
BlackRock Inc. (BLK), one of nine companies chosen to manage a government-subsidized program to revive the mortgage-backed securities market, said it returned money to investors and gave the U.S. Treasury a 24 percent rate of return since October 2009.
The Treasury invested $528 million in BlackRock’s fund that participated in the Public Private Investment Program and received that money back as well as $389 million in profit, the New York-based company said today in a statement. Private investors also put $528 million in the fund.
“As with all of our investments, our primary goal is to maximize the return for all of our investors, including Treasury, through a carefully constructed risk framework,” Robert Kapito, president of BlackRock, which manages $3.67 trillion in assets, said in the statement.
PPIP was designed to support the functioning of the mortgage-backed securities markets and allow banks and other financial institutions to extend new credit to households and businesses. Timothy Massad, the Treasury’s assistant secretary for financial stability, said in an interview on Bloomberg Television in October 2010 that the program helped restart credit so homeowners, small businesses and consumers could get financing again.
Randy Robertson, head of BlackRock’s securitized asset investment team, was the lead portfolio manager for the fund and Sacha Bacro, head of special opportunities, led its structuring and design, according to Brian Beades, a spokesman for the firm.
Other PPIP managers included Invesco Ltd. (IVZ) and AllianceBernstein Holding LP (AB), which already liquidated their funds. Invesco, based in Atlanta, said in April it had returned money to investors, giving the Treasury an 18 percent annualized return over 29 months. In October, New York-based AllianceBernstein said it had returned all of the capital raised in its PPIP fund to investors, with the Treasury earning 19 percent since the fund’s inception.
The BlackRock fund also borrowed $1.05 billion from the Treasury, according to department’s most recent update for the program for the quarter ended Sept. 30. BlackRock’s PPIP fund deployed about 75 percent of the almost $2.8 billion in available committed capital, according to the statement.
Under the program, the Treasury originally committed $22.1 billion of equity and debt in PPIP funds, the Treasury report said. PPIP managers aren’t required to return money until at least eight years from the funds’ initial closings in 2009.
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