Wall Street’s $6 trn man Fink is fi­nally worth $1 bn

Business Standard - - WORLD - TOM MET­CALF

It’s not hard to imag­ine. There’s Larry Fink, Star­bucks cof­fee in hand, head­ing down Park Av­enue. And there’s Stephen Sch­warz­man, his old boss, head­ing up. Bil­lion­aires col­lide.

It’s not hard be­cause Fink and Sch­warz­man — two of the most suc­cess­ful fi­nan­cial whizzes of our time — have been on a col­li­sion course for years. They work, lit­er­ally and fig­u­ra­tively, on the op­po­site sides of the same street, per­son­i­fy­ing a con­test that’s re­mak­ing money man­age­ment.

On one side is Fink, power player in low­cost pas­sive in­vest­ments. On the other is Sch­warz­man, old-school deal­maker and cham­pion of high-touch, high-fee al­ter­na­tive in­vest­ments like pri­vate eq­uity.

The broad out­lines of their twin careers are by now well-known. First came the years to­gether at Sch­warz­man’s Black­stone Group LP, where the young Fink added a bond shop to the striv­ing buy­out oper­a­tion. Then, the in­evitable split. Fink got what was then the un­der­dog: Black­Rock Inc.

It’s no un­der­dog now. Lately, the in­vest­ment world has been tilt­ing Black­Rock’s way. To­day the firm sits atop $6.3 tril­lion in as­sets, mak­ing it the world’s largest money man­ager and one that dom­i­nates the mar­ket in pas­sive-in­vest­ments.

Its sheer size and diver­sity helped pro­tect it amid 2018’s choppy mar­kets. Last week’s first quar­ter re­sults beat es­ti­mates even as traders de­voted less cash to its ex­change-traded funds. The firm at­tracted long-term net in­flows of $55 bil­lion and rev­enue grew 16 per­cent year-over-year.

Fink’s per­sonal for­tune, mean­time, has at last eclipsed $1 bil­lion, ac­cord­ing to the Bloomberg Bil­lion­aires In­dex. His hold­ing in Black­Rock is val­ued at $570 mil­lion with div­i­dends, stock sales and com­pen­sa­tion — $27.7 mil­lion in 2017 — mak­ing up the rest.

"Fink is up there with names like Jamie Di­mon and War­ren Buf­fett,” says Kyle San­ders, an an­a­lyst at Edwards Jones & Co. “You have to look at Larry when you think of as­set man­age­ment.”

Black­stone, by con­trast, over­sees $434 bil­lion. And nowa­days, pri­vate-eq­uity types are chas­ing deals de­spite lofty val­u­a­tions and ris­ing in­ter­est rates. Not that Sch­warz­man is hurt­ing. He crossed the bil­lion­aire mark years ago and is now worth about $12 bil­lion, ac­cord­ing to the Bloomberg rank­ing.

The gap be­tween Fink and Sch­warz­man, both in strate­gies and per­sonal for­tunes, says a lot about their re­spec­tive busi­ness models.

Fink has trailed in per­sonal wealth be­cause he owns only a tiny piece of Black­Rock: 0.7 per cent. Back in 1994, Black­stone sold its stake in Fink’s out­fit as Sch­warz­man railed against di­lu­tion be­cause of Fink’s de­sire to award new hires eq­uity in the busi­ness to lure them from top banks. Since then, Fink’s con­tin­ued to spread own­er­ship among his em­ploy­ees and used Black­Rock stock to make key ac­qui­si­tions. He’s also held on to much of his orig­i­nal man­age­ment team — five of the eight co-founders are still in­volved -- and avoided the Gor­don Gekko im­age some as­so­ciate with pri­vate eq­uity.

That Fink has man­aged to pass the bil­lion­dol­lar mark is, in fact, a tes­ta­ment to Black­Rock’s suc­cess. Since its 1999 list­ing, its share price has re­turned more than 3,600 per­cent. Black­stone’s shares have barely budged since its 2007 ini­tial pub­lic of­fer­ing.

A spokesman for Fink de­clined to com­ment on his net worth. Sch­warz­man didn’t re­spond to re­quests for com­ment.

Seller’s re­morse? Sch­warz­man once said that un­load­ing Black­Rock was a “heroic” mis­take. To­day, he’s far richer than Fink but, in terms of as­sets and stock per­for­mance, Black­Rock has won.

Larry Fink’s hold­ing in Black­Rock is val­ued at $570 mil­lion with div­i­dends, stock sales and com­pen­sa­tion mak­ing up the rest

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.