has become the largest shareholder of the company that owns brands including Sports Illustrated, Nine West and Aéropostale in the first deal for the investment company’s new private-equity fund.
BlackRock is taking a roughly $875 million stake in Authentic Brands Group LLC that values the closely held brand development, marketing and entertainment company at more than $4 billion including debt, according to people familiar with the matter.
BlackRock announced the deal Sunday, confirming an earlier report by The Wall Street Journal. It didn’t disclose details including the size of the investment.
BlackRock is set to supplant private-equity firm Leonard Green & Partners as Authentic Brands’ largest shareholder. Leonard Green and other shareholders, including private-equity firms General Atlantic and Lion Capital LLP, will remain invested but will sell down their stakes to make room for BlackRock.
Authentic Brands’ management, led by Chief Executive Jamie Salter, will also continue to own a significant stake.
BlackRock, the world’s biggest money manager, has been trying to diversify away from exchange-traded and index funds, which comprised two-thirds of its roughly $6 trillion in assets and were responsible for about 40% of its revenue in 2018, and into business lines that allow it to lock up money for longer and charge higher fees.
Long Term Private Capital, as the BlackRock private-equity fund is known, was designed to emulate sovereign-wealth funds and other such pools by allowing its managers to hold bets for as long as they desire. The model sets it apart from the majority of private-equity funds, which are required to sell off assets and return capital to investors within a set period of time.
But the experiment has been slow to get off the ground, in part because BlackRock began pitching it to investors before a full team was in place to staff it, the Journal has reported. The firm, which set out last year to raise at least $12 billion, said in April it had accumulated $2.75 billion.
Other big asset managers, drawn to the higher fees and returns private equity has traditionally offered, are watching BlackRock’s venture closely. Vanguard Group recently had discussions with a handful of private-equity firms as the indexing giant weighs whether to partner with them to offer their funds to its investors, the Journal has reported.
Colm Lanigan, a BlackRock managing director and a senior official at Long Term Private Capital, has a longstanding relationship with Authentic Brands and led the deal, for which there was no auction process.
Mr. Lanigan, who joined BlackRock earlier this year, previously led North American private-equity and built the principal-investing business at sovereign-wealth fund Abu Dhabi Investment Authority, or ADIA, which is a cornerstone investor in the BlackRock fund.
Founded in 2010 by Mr. Salter, Authentic Brands owns and licenses a global portfolio of 50 entertainment and lifestyle brands responsible for $9.3 billion in annual retail sales.
The company, which has roughly doubled its sales and earnings over the past two years, has high margins and considerable visibility into future revenue, making it a good fit for the long-term strategy, people familiar with the matter said.
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