BlackRock eyes co-investment secondaries

The world's largest asset manager also eyes an opportunity to buy highly coveted, rarely traded fund stakes, according to secondaries co-head Steve Lessar.

BlackRock‘s large portfolio of co-investments represents a secondaries market opportunity, according to the co-head of its secondaries unit.

In an article sent to media outlets, Steve Lessar said that his team has an “excellent idea of who our fellow co-investors are and strong points of view on their portfolios”, adding that if any of them are seeking liquidity, “we are likely a good buyer”.

BlackRock made its first private equity co-investment in 2001, according to its website. The size of its co-investment portfolio is unclear.

For stakes in limited partnerships, Lessar’s team keeps a ‘buy list’ of funds that rarely trade, many of which BlackRock is a long-time investor in.

Proactively reaching out to LPs with a ready price for these funds could result in a transaction in this environment, he wrote.

BlackRock also believes fund-level credit facilities will be a driver of potential sales by limited partners. GPs have to call large amounts of capital to pay off these facilities just as the value of assets is falling, a combination which “may exacerbate liquidity issues”, Lessar wrote.

The secondaries market is not likely to reopen until March net asset values start to trickle through in mid-May, he added.

BlackRock’s debut secondaries fund held an interim close on just under $1 billion in early April, Secondaries Investor reported. BlackRock Secondaries & Liquidity Solutions is targeting $1.5 billion.

Steve Lessar and Konnin Tam joined BlackRock from Goldman Sachs Asset Management in 2018 to lead the firm’s push into secondaries.