Juliet Samuel

The sinister rise of BlackRock asset manager

A few months ago, an aggressive US pressure group called the Campaign for Accountability declared that it had a new target: the Wall Street behemoth BlackRock. Quickly, the American press picked up on this campaign against excessive corporate power. Soon we were reading about how BlackRock, like Goldman Sachs before it, ‘rules the world’.

Despite BlackRock’s supposed omni-potence, it is relatively unknown in Britain. It might be the biggest private manager of assets in the world but, in political terms, the company has existed in relative obscurity. That is, until last year, when it handed George Osborne a £650,000 contract for giving ‘advice’ one day a week.

In recent months, the firm’s political profile has been rising. When the former German MP Friedrich Merz suddenly re-emerged into German politics as a possible successor to Angela Merkel, BlackRock’s name appeared again: Mr Merz is the chairman of its growing German business.

Long before BlackRock spread its tentacles into politics, however, it was upending Wall Street’s hierarchy and changing the way people invest. In the late 1980s, BlackRock was spun out of the US private equity firm Blackstone. It began life as a small outfit offering a new way to manage risk and invest in bonds. Within months, under the leadership of its co-founder and chief executive Larry Fink, its approach caught on and the company began to grow.

By the time the financial crisis hit in 2008, BlackRock was already a substantial player in the world of asset management — investing money on behalf of regular savers, insurers and pension funds. While the crisis proved devastating for so many banks, it provided BlackRock with an opportunity.

Barclays, keen to raise cash to rebuild its investment bank, put its asset management arm up for sale and BlackRock beat rivals to snap up the business for $13.5 billion.

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