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European institutions are increasingly pushing into private markets to help mitigate “a new regime of higher volatility”, BlackRock has said, as it rapidly expands its own activity in the sector.
Dominik Rohé, deputy head of international business at the world’s largest fund manager, said clients in Europe, the Middle East and Africa accounted for about 35 per cent of its private asset fundraising last year.
The amount raised from institutions in this region increased by more than 50 per cent in absolute terms from 2024, in a sign of the fast-growing adoption of private assets in this market.
Rohé said institutions in Europe such as pension funds have been shifting away from public equities and bonds towards private assets, partly to manage market turbulence and to find investments whose returns were not correlated with movements in stock or bond markets.
“European institutions are allocating more to private markets as they recognise that we are in a new regime with higher volatility and different correlations between bonds and equities,” he told the FT.
BlackRock has bought three firms — infrastructure investment group Global Infrastructure Partners, private investment firm HPS Investment Partners and data provider Preqin — to fuel its expansion in the sector over the past two years. It is targeting $400bn in private market fundraising by 2030.
The private markets sector has grown rapidly as investors have been attracted to an asset class that is viewed as less volatile because it is priced less frequently than public markets. But private markets can be more opaque and the less frequent valuation process can pose a risk for investors.
Geopolitical tensions and policy uncertainty pushed up volatility last year, including a sharp sell-off in equity markets in the wake of US President Donald Trump’s “liberation day” tariffs, even as equities reached all-time highs.
Institutions “also see the opportunity to achieve early and diversified access through private markets into areas that are driving the economy, such as the infrastructure that will support the growth of AI as well as cash flowing businesses that have chosen to stay private for longer”, Rohé said.
BlackRock this week reported strong inflows into its fast-growing private markets unit, with the private credit business attracting $7.2bn and its infrastructure investment unit drawing in close to $5bn in three months.
BlackRock has amassed $322.6bn of assets under management in private markets. Total assets under management climbed to a record of $14tn, driven by its equity and fixed-income business.
Rohé said that private markets “can be more opaque to evaluate” and warned investors to be mindful of some of the liquidity challenges posed by private assets that can be harder to value and sell.
He added that across the EU and UK, more than 90 per cent of companies with annual revenue of over $100mn are privately held.
