BlackRock’s Happy Place is at the Crossroads of All Global Capital

Larry Fink is happy to go with the flow. And, increasingly, everything is flowing through BlackRock.

In a blockbuster third-quarter earnings report on Wednesday, the asset management supergiant said it took in net inflows of $205 billion, beating expectations. The new money helped push its total assets under management to a truly titanic $15.5 trillion, up 15% year over year. Meanwhile, Fink said in a statement that “demand for capital is growing across the global economy,” and boasted how the company and various subsidiaries including Global Infrastructure Partners and HPS Investment Partners are “increasingly at the center of how that capital is deployed and managed.” Here’s how all that money is flowing in and out.

Private Practice

BlackRock’s core money management business, to put it in Classic Rock terms, is hooked on a feeing. The firm’s iShares line of exchange-traded funds accounted for $135 billion of its $205 billion inflows. That includes $22 billion in inflows for active ETFs, up nearly 5% year over year; active ETFs draw higher fees than typical ETFs. Meanwhile, $66 billion of inflows came from non-ETF actively managed funds, which come with much higher fees. In fact, ETFs and active funds generated roughly the same share of total base fees, despite the large inflow disparity.

Still, Fink’s dream is to lure more client money into the much more lucrative alternatives, such as those in the private market, which account for just 3% of BlackRock’s AUM but 15% of total base fees. Not so coincidentally, he sees plenty of demand for the company to meet. “For the first time in my career … I’m seeing genuine shortages of capital,” Fink said during the company’s earnings call. “Governments are running historically large deficits, while at the same time, demand for private capital is rising across the economy. Governments need financing for infrastructure. Companies need to fund a generational AI build-out.” Rest assured, BlackRock is finding plenty of new homes for its clients’ capital:

• BlackRock said Wednesday it deployed $30 billion across private markets in the quarter (bringing its total up to $88 billion in the last 12 months). It also raised $14 billion across its private market funds (for a total of $68 billion in the last 12 months) and is sitting on $139 billion in dry capital.
• Recent days have delivered even more deals. BlackRock’s HPS division on Tuesday entered a $2.8 billion joint venture with Humana to manage and finance 150 senior care centers, while GIP entered into a joint venture with AT&T earlier this month to finance fiber optic expansion.

A $100 Trillion Opportunity: The big fish, of course, is data center growth and the energy infrastructure needed to support it. GIP President and COO Raj Rao told Bloomberg on Wednesday that global infrastructure investments represent a $100 trillion opportunity in the next 10 to 15 years. Fink, meanwhile, sees the build-out as similarly critical. “If we have a [data center construction] moratorium of some sort in this country, we will be in a recession,” Fink told CNBC, adding “So much of our economy is based on the buildout of this capex.” So now data centers are too big to fail.