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July 2024, an asset manager with over $1600 billion in assets signs with its competitor. He will plunder BlackRock for its money, for its technology. A technology that brings in nearly $2 billion a year for BlackRock. And this story begins with a loss, about $100 million in a single quarter. The man who lost them is named Larry Fink.
Today, his company manages over $15 billion. So how does a rival end up paying him off? Behind the name of the financial giant, there are three things: a product that is not an investment, another manager who chose to buy it, and two different ways of making money. Connect these three clues and BlackRock's place in finance takes on a completely different meaning.
BlackRock was founded in 1988 by Larry Fink and seven other people. Its asset management business consists of investing capital on behalf of clients. At first glance, it's simple. Customers entrust their money to a company, which manages it and bills for its services. However, another product is included in BlackRock's offering.
Aladdin. This name refers to a technological platform intended for investment professionals. In particular, it allows you to organize portfolios, i.e. sets of investments, to analyze their risks and to monitor operations. Imagine several investments whose values react differently to an economic change.
Looking at them separately is not always enough to understand the risk of the whole. This is the kind of work that an analysis tool can help you perform. Please note, it does not eliminate risk and it does not guarantee any gain. BlackRock also markets a way to work with money. And that's when an unexpected customer enters the scene .
Breaking news, July 2024, BlackRock announces that Franklin Templeton has chosen Aladdin to unify its management technology across listed markets. Violette, you're live with us. Yes, Sacha. And the surprise is the buyer. Franklin Templeton is himself an asset manager. A competitor therefore buys BlackRock's technology .
Back to you, Sacha. Two rivals who became supplier and customer. That's all Sacha. But ? The sales presentation highlights the reduction of complexity and the development of the business. These are the stated objectives. They do not, on their own, prove the results obtained. But the relationship is revealing.
Two companies can deal with the same market and also maintain a supplier-customer relationship. And choosing a tool is not the same as entrusting all your decisions to the seller. Remember this nuance. Everything that follows depends on it. On one hand, BlackRock manages capital and collects fees related to the assets managed.
On the other hand, the company sells technology services and subscriptions. These two activities do not meet the same demand. The first concerns money management. The second provides tools to those who deal with it . So, let's go back to the beginning of the puzzle. Why would another manager pay? Because it can buy its technology while retaining its own teams and investment decisions.
And that's where everything becomes clear . The discovery lies in this dual space. BlackRock can seek clients for its placements and sell tools to other professionals who are also seeking clients. The expansion of a company can therefore involve equipping its own sector beyond its best-known activity.
Warning, this does not demonstrate control over the placement of Aladdin users. The established fact is more precise. BlackRock also occupies a position as a technology provider. Behind the manager, there is therefore another profession. And behind the competition, there's a business relationship that isn't visible when you only look at the investments.
When two companies are competing for a market , also look at who is supplying the tools. Sometimes, that's where part of the story unfolds. Which company would you like us to analyze? Tell us in the comments and subscribe to discover the stories behind the fortunes. It's free. An anomaly that we are still trying to understand.
Not everything is billable, Sacha. We have just explained how to make your competitors pay. Excuse me for taking notes.
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