BlackRock To Purchase Custom Index Provider Aperio For $1B To Boost Portfolio Management Services

Investment management company BlackRock Inc BLK has agreed to absorb operations of wealth management company Aperio Group along with the employees. Aperio is backed by private equity firm Golden Gate Capital.

What Happened: The $1.05 billion acquisition deal will be settled entirely in cash and could be closed by the first quarter of next year.

Aperio will be vertically integrated with BlackRock’s wealth advisory business in the U.S. but continue to operate as a separate brand.

The company's CEO Patric Geddes will retain his role as Chief Tax Strategist and also become a senior advisor with BlackRock — overlooking portfolio construction research.

Aperio’s assets under management grew at an annual organic rate of 20% over the past five years. As of Sept. 30, its portfolio of managed assets was close to $36 billion.

With the acquisition of Aperio’s operations, Blackrock’s assets under Separately Managed Accounts (SMA) will rise to over $160 billion.

Why Does It Matter: Aperio offers tax-optimized custom index equity portfolio management services to ultra-high-net-worth-individuals. According to the Wall Street Journal, through the acquisition, BlackRock can increase personalized offerings for its wealth management clients.

Earlier in October, Morgan Stanley MS acquired investment management company Eaton Vance Corp EV for a purchase consideration of $7 billion payable partly by cash and the balance by way of stock.

Price Action: BlackRock closed 1.51% higher at $682.87 on Monday.