BlackRock Closes ETF Acquisition Deal With Credit Suisse

by Trefis Team
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BlackRock (NYSE:BLK) has successfully closed the deal it signed with Credit Suisse (NYSE:CS) this January for the acquisition of 58 Switzerland based exchange traded funds (ETFs) – reinforcing its position as the market leader in Europe’s ETF industry. [1] The world’s largest asset manager agreed to take the funds managing $17.6 billion worth of assets off the Swiss bank’s hands in a bid to expand its footprint in Switzerland, but the deal ran into delays with both the Irish Competition Authority and U.K.’s Office of Fair Trading who, conducted individual investigations into the impact of the acquisition on the region’s ETF markets. [2]

The finalization of the deal, which saw BlackRock re-brand the acquired ETFs under its flagship iShares banner, makes the asset management giant the biggest ETF provider in Switzerland with CHF 7.7 billion ($8.1 billion) in assets under management. At the same time, it brings Credit Suisse one step closer to its goal of streamlining its diversified business operations amid strict Swiss regulatory requirements.

See our full analysis for BlackRock | Credit Suisse

BlackRock is the undisputed leader in the global asset management industry with a little less than $4 trillion in assets under management at the end of Q1 2013. There is no denying the fact that over recent years, a majority of the company’s growth has come from the popularity of its iShares ETF offerings across the globe. BlackRock manages nearly $800 billion in retail and institutional investors’ assets under iShares and continues to maintain its focus in the industry, as it believes that there is still a lot of growth potential in ETFs worldwide.

As a major financial hub, Switzerland figured high on BlackRock’s priority list, with the company expressing its intent to acquire Credit Suisse’s ETF business “at any cost” when the unit went on the block earlier this year. ((BlackRock buy bodes ill for others, Financial Times, Jan 13 2013)) Moreover, Credit Suisse boasted of the fourth biggest ETF unit in Europe, and the acquisition would also mean a huge impetus to BlackRock’s presence on the other side of the Atlantic. In fact, it is the large size of the unit involved that drew attention from regulatory watchdogs in Ireland and U.K. who wanted to ensure that the deal did not hinder the region’s competitive environment.

The deal brings in almost $18 billion in assets to BlackRock’s portfolio, spread across equities, fixed-income and gold funds. An idea of how the acquisition will impact the company’s value can be obtained by making changes to the chart below, which represents the size of assets under BlackRock’s equity iShares offerings.

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  1. BlackRock iShares completes acquisition of Credit Suisse ETF business, ETF Strategy, Jul 1 2013 []
  2. UK watchdog delays BlackRock’s Credit Suisse deal, The Financial Times, May 28 2013 []
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