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📰 BlackRock Acquires Private Equity Data Provider Preqin for £2.5Bn

📰 BlackRock Acquires Private Equity Data Provider Preqin for £2.5Bn

The Importance of Data for Investment Firms

Afzal Hussein
July 04, 2024

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Estimated read time: 3 minutes

Hey 👋!

Welcome back to another issue of Finance Focus.

Today we’re covering the strategic acquisition of Preqin by BlackRock for £2.55bn, a landmark deal that underscores the growing importance of data in private markets. Preqin, a leader in providing detailed analytics on private equity and venture capital, now joins forces with the world’s largest asset manager. This acquisition not only marks a significant milestone for Preqin (the UK founder is now a billionaire!) but also highlights the shifting dynamics in the financial services industry, where accurate data and innovative financial products are key to staying competitive.

If there’s one thing worth noting let it be the significance and importance placed on good quality data. This acquisition is testament to the increasing value of financial data in today's investment landscape. As private markets expand and companies stay private longer, the demand for detailed, accurate data has never been higher.

This strategic move by BlackRock not only enhances its capabilities in the private equity space but also sets the stage for the creation of innovative financial products - they already have a behemoth in Aladdin. The integration of Preqin’s extensive database with BlackRock’s existing technologies promises to democratise access to private market data, making it a game-changer for the industry.

Here’s the article. Scroll down to read my key takeaways and thoughts on the topic.

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📰 The BlackRock private data deal that minted a UK billionaire

TL;DR: Mark O’Hare (a British entrepreneur) founded Preqin, a leading data and analytics tool, which BlackRock recently acquired for £2.55bn. Preqin’s data services enable investment professionals to track data related to private equity, venture capital, and other asset classes. This sector has seen significant growth in recent years and the acquisition underscores the increasing value of financial data in investment decision-making.

Key Takeaways:

Strategic Acquisition by BlackRock: BlackRock’s acquisition of Preqin for £2.55bn signifies a major move to enhance its private markets data capabilities, aligning with its strategy to expand in private equity. BlackRock aims to use Preqin's extensive database to develop new indices and tracking funds, thereby broadening the scope of its iShares arm beyond traditional equities and bonds.
Growth and Importance of Preqin: Preqin has become a leading data provider for private capital markets, offering comprehensive information on fundraising, deals, and performance, critical for investment and advisory firms. Preqin's rise correlates with the significant growth of private equity, underscoring its pivotal role in providing valuable insights into a market that’s seen substantial growth.
Impressive Returns: On Tuesday I wrote about the profitable acquisition and sale of Refinitiv by Blackstone. The BlackRock acquisition highlights the value of financial data companies. BlackRock paid 13 times Preqin’s expected 2024 revenues, emphasising the high strategic value placed on comprehensive and accurate data.
Impact on Private Equity Market: The deal illustrates the growing demand for private market data as companies stay private longer, with investors seeking detailed insights for better decision-making. The acquisition underscores the scarcity and high value of quality data assets in the private market space, driving up their strategic importance.
Future of Financial Data Integration: BlackRock plans to integrate Preqin’s data with its risk management technology, aiming to democratise access to private market data and develop new indices and tracking funds for private equity. Combining Preqin's extensive data with BlackRock's technology could lead to innovative financial products and broader market reach.

Personal Thoughts:

Transformative Impact on Financial Services: This acquisition highlights the increasing necessity for accurate, comprehensive data in modern finance. Firms now rely heavily on detailed analytics for investment strategies, making data providers like Preqin central to the financial landscape.
Strategic Fit for BlackRock: BlackRock’s move to acquire Preqin is a strategic fit to bolster its private equity market offerings. This enhances its data capabilities and positions it to create innovative financial products leveraging Preqin’s extensive database. This also give BlackRock a major competitive advantage to its competitors and makes it an even more attractive firm for potential clients to consider investing with.
Innovation in Investment Management: The acquisition showcases the innovative approaches financial giants are taking to remain competitive. Integrating advanced data analytics with traditional investment strategies allows companies like BlackRock to offer more tailored and insightful solutions for their clients.
Economic and Market Implications: As private markets grow, the need for transparent, reliable data becomes crucial. Data is the currency these days. Exceptional quality data can unlock new opportunities and this acquisition underscores the value of data accuracy and the lengths firms will go to secure it.
Reflection on Market Trends: The deal reflects broader market trends where private equity and other alternative investments are becoming mainstream, highlighting the increasing competition among financial services firms to capture market share in this lucrative sector.

That’s it for today. If you haven’t already, you can read yesterday’s issue here.

See you tomorrow!

Afzal