BlackRock has agreed to purchase Sausalito, California-based Aperio Group, that offers tailored index equity solutions to wealthy individuals, in a cash deal valued at $1.05bn.

The sellers are San Francisco-based private equity firm Golden Gate Capital and Aperio employees.

Transaction details

Aperio will become a separately branded, vertically integrated team within the US Wealth Advisory arm of BlackRock.

Aperio collaborates with wealth advisers to develop customised and tax-efficient, public equity portfolios.

The acquisition of the $36bn firm is said to support BlackRock’s wealth platform with tax-managed equities, factors, and ESG strategies.

Upon deal completion in the first quarter of next year, BlackRock’s assets in separately managed accounts (SMA) will reach more than $160bn – marking a surge of nearly 30%.

The deal, which will be minimally dilutive to earnings per share, will be financed using existing corporate liquidity.

The deal is not anticipated to be “dilutive on a cash basis”, noted the world’s largest asset manager.

BlackRock US Wealth Advisory business head Martin Small said: “The wealth manager’s portfolio of the future will be powered by the twin engines of better after-tax performance and hyper-personalisation. BlackRock and Aperio, working together, will bring unmatched capabilities to meet these objectives.

“The combination will bring institutional quality, personalised portfolios to ultra-high net worth advisers and will create one of the most compelling client opportunities in the investment management industry today.”

Aperio’s investment, business development, client service, as well as ESG-SRI processes will remain intact.

Ran Leshem and Liz Michaels will move to BlackRock and spearhead these processes as co-heads of the Aperio team.

Existing Aperio CEO Patrick Geddes will continue to serve as the firm’s chief tax strategist and also assume the role of a senior adviser at BlackRock.

Leshem and Michaels said: “With BlackRock, we have found a like-minded fiduciary firm with long-standing roots in tax-efficient indexing, a commitment to sustainable investing, and Diversity, Equity & Inclusion, and a track record of delivering consultative whole portfolio solutions to wealth management intermediaries.”

The Aperio deal continues BlackRock’s growth trajectory, which has been aided through several acquisitions in recent times.

Earlier this year, BlackRock picked a significant minority stake in iCapital Network – a fintech platform that connects advisers and investors with alternative investment managers.

In 2019, the US-based asset manager acquired eFront – a French software provider specialising in the alternative investment management space.

In 2018, BlackRock agreed to acquire a 4.9% equity stake in wealth management software provider Envestnet and also acquired US-based private credit manager Tennenbaum Capital Partners.