BlackRock Inc. planned to shake up the private-equity world with a $12 billion fund. Now the asset-management giant is setting its sights lower.
BlackRock’s staffers conceded the target was unrealistic after struggling to meet fundraising goals. The firm’s staffers hope to grow the fund to between $4 billion and $6 billion in assets over time, people familiar with the matter said.
Best known for funds that track broad markets and trade on exchanges, BlackRock launched fundraising for a strategy in 2018 to make direct, long-term investments in private companies. The fund was an aggressive gambit to take on private equity’s big league deal makers.
Private markets are one of the few corners of finance untouched by fee pressures that have pulled the cost of investing closer to zero. But it is hard to build a presence from scratch. Many asset managers face challenges replicating their reach over stock-and-bond markets in the complex, labor-intensive business of investing in privately held companies.
So far, BlackRock has raised less than one-third of its original goal—$3.4 billion, as of the end of 2020, according to people familiar with the matter. BlackRock, which had an initial year-and-a-half window to raise money for the fund, missed internal fundraising deadlines and asked investors for a few more months to seek money, according to some of the people familiar with the matter. Now BlackRock can’t raise further money until 80% of that money is invested, fund documents dictate.