On Monday, UBS reaffirmed its Neutral rating on BlackRock Inc (NYSE:BLK) with a consistent price target of $842.00. BlackRock has recently made headlines with its announcement to acquire Preqin, a prominent provider of private market data, for $3.2 billion in an all-cash transaction. The deal is expected to be finalized by the end of 2024.
The acquisition is seen as a strategic move for BlackRock to deepen its presence in the private markets, complementing its earlier transaction with GIP. The purchase price of Preqin is considered high, at 13 times its projected 2024 revenues. This move is anticipated to have a slight dilutive effect on BlackRock's earnings per share in 2025, estimated at 1-2%.
Funding for the acquisition is planned through $3 billion in debt, which will elevate BlackRock's debt to EBITDA ratio to 1.4 times. Despite the near-term financial effects that may not be favorable, the acquisition aligns with BlackRock's strategy to enhance its capabilities in alternative investments, an area the firm is expected to continue pursuing.
The acquisition of Preqin by BlackRock represents a significant step in the company's strategy to broaden its services beyond traditional asset management. The move is in line with BlackRock's focus on expanding its alternative capabilities, which are becoming increasingly important in the asset management industry.
In other recent news, BlackRock Inc. has made significant strides in the private markets sector with its recent acquisition of data provider Preqin for nearly $3.2 billion. The move is expected to enhance BlackRock's capabilities by leveraging Preqin's data to create investable indices and exchange-traded products. According to Citi, this strategic acquisition is anticipated to contribute approximately $240 million in highly recurring revenue for the year 2024.
Additionally, BlackRock successfully defended its board of directors in a shareholder vote against a challenge from Saba Capital Management. Despite Saba's push for change, shareholders sided with the current management, retaining BlackRock as the manager of the funds.
Furthermore, BlackRock is set to restart formal negotiations with Sri Lanka concerning the restructuring of over $12 billion in bonds. The discussions are expected to recommence after a group of bondholders, including BlackRock, agreed to non-disclosure terms. These developments highlight BlackRock's active role in both the private markets and global financial negotiations.
InvestingPro Insights
As BlackRock Inc (NYSE:BLK) navigates the strategic acquisition of Preqin, investors may find value in understanding the company's current financial standing and market performance. With a market capitalization of $116.2 billion and a P/E ratio of 19.67, BlackRock appears to be trading at a valuation that is mindful of near-term earnings growth. In fact, one of the InvestingPro Tips highlights that BlackRock is trading at a low P/E ratio relative to its near-term earnings growth prospects.
Furthermore, BlackRock's commitment to shareholder returns is evident through its consistent dividend policy, having raised dividends for 14 consecutive years and maintained payments for 22 years. This dedication to returning value to shareholders is especially relevant as the company undertakes significant investments in the private market sector. Additionally, with a dividend yield of 2.59%, the stock offers an income stream that complements potential capital gains.
For those considering a deeper analysis of BlackRock's investment potential, InvestingPro provides additional insights and tips, including a total of 6 InvestingPro Tips for BlackRock. To access these valuable tips and enhance your investment strategy, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at https://www.investing.com/pro/BLK.
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