BLK Deepens Private Market Footprint With ElmTree Deal: Time to Buy?

As part of its goal to raise $400 billion for private markets by 2030, BlackRock BLK has signed a definitive agreement to acquire ElmTree Funds, a St. Louis–based real estate investment firm specializing in net-lease assets. ElmTree managed $7.3 billion in assets as of March 31, 2025.

The acquisition further expands BlackRock’s private markets platform, giving clients broader access to alternative investments beyond traditional stocks and bonds. It also builds on the company’s recent acquisition of HPS Investment Partners (“HPS”), reinforcing its push into private credit and real assets. 

The upfront payment will be made primarily in BlackRock stock, with the potential for additional performance-based payouts over the next five years. Further financial terms of the deal, expected to close later this quarter and subject to regulatory approvals, were not disclosed.

Upon closing, ElmTree will join BlackRock’s Private Financing Solutions (“PFS”) platform, formed through its merger with HPS. The combination leverages ElmTree’s commercial real estate expertise and HPS’s credit strengths to offer clients stable, long-term income solutions with attractive risk-adjusted returns.

Over the past year, BlackRock has invested more than $28 billion to strengthen its position in the high-growth private markets space. In addition to acquiring HPS in July, it purchased Preqin, a leading private markets data provider, in March, and Global Infrastructure Partners (“GIP”), the largest independent infrastructure manager, in October 2024.

BlackRock’s Efforts to Expand Alternative Assets Offerings

In his April shareholder letter, BlackRock CEO Larry Fink highlighted the company’s pivot to private markets as a strategic move to help clients achieve stronger returns than those offered by the traditional 60/40 stock-bond portfolio. Fink wrote, “The future standard portfolio may look more like 50/30/20 — stocks, bonds, and private assets like real estate, infrastructure, and private credit.”

Reflecting this shift, BlackRock is advocating for the inclusion of private assets in retirement savings plans. In June, it unveiled plans to launch a target-date fund, offered through Great Gray Trust, that will incorporate private equity, private credit and other alternative investments.

BlackRock has also collaborated with Partners Group to combine a varied pool of private assets into a single portfolio of alternatives for retail clients. Also, the company is integrating private equity and credit investments into pre-built portfolios to cater to rising demand among individual investors. It designed model portfolios that combine publicly traded stocks and bonds alongside more sophisticated private equity and credit funds, with plans to add other alternatives over time. The company claims the offering to be the first of its kind in the asset management industry.

Many of BlackRock's competitors in the alternative asset management business, like Apollo Global Management APO, Blackstone BX and Ares Management ARES, have made substantial strides in private markets.

Solid AUM Growth to Drive Revenues

BlackRock has been focusing on diversifying its product suite and revenue mix. This, along with strategic buyouts, has been improving assets under management (AUM) over the years. AUM witnessed a five-year (2019-2024) CAGR of 9.2%. 

As of March 31, 2025, BlackRock’s total AUM was a record $11.58 trillion, with net inflows of $83 billion. The momentum will likely continue as efforts to strengthen the iShares unit (offering more than 1,400 ETFs globally) and ETF operations and an enhanced focus on the active equity business are likely to offer support.

Such product diversification efforts are likely to bolster BLK’s revenue mix, reduce revenue concentration risk and allow it to serve a broader range of clients, aiding AUM growth. The company’s GAAP revenues recorded a CAGR of 7% over the last five years ended 2024, with the momentum continuing in the first quarter of 2025.

Moreover, the combination of HPS Investment, Preqin and GIP data with BLK’s alternative asset management platform, eFront, will drive solid revenue growth in the quarters ahead. This is likely to get further complemented by the ElmTree buyout.

Sales Estimates
 

Should BLK Stock be in Your Portfolio on Private Market Push?

Yesterday, following the announcement of the ElmTree acquisition, BlackRock shares briefly touched a new 52-week high of $1,086.84. In the past year, the stock has rallied 34.1%, outperforming the industry and its peers – Apollo Global, Blackstone and Ares Management. This shows investors’ confidence in the company’s business expansion efforts.

One-Year Price Performance
 

Further, analysts are bullish on BlackRock. Over the past week, the Zacks Consensus Estimate for 2025 and 2026 earnings has been revised upward to $45.64 and $51.02, respectively.

Estimate Revision Trend
 

The projected figures imply growth of 4.7% and 11.8% for 2025 and 2026, respectively.

From a valuation perspective, BLK stock is inexpensive compared with the industry. The company’s price-to-book (P/B) of 3.46X is lower than the industry's 3.80X. Thus, the stock is trading at a discount. This suggests that investors may be paying a lower price relative to the company's expected earnings growth.

Price-to-Book Ratio
 

Further, BLK stock is inexpensive compared with Ares Management and Blackstone. ARES and BX have a P/B of 8.46X and 6.04X, respectively.  On the other hand, the company is trading at a premium compared with Apollo Global, which has a P/B of 2.61X.

BLK’s encouraging capital distribution plan acts as a catalyst. The company has increased its dividend five times in the last five years, with an annualized growth rate of 7.3%. It also has a share repurchase plan in place. It aims to buy back shares worth $1.5 billion this year.

However, a steady rise in expenses is a headwind for BLK. The company recorded a five-year CAGR of 7.4% (ended 2024), mainly due to higher general and administrative costs. Overall costs are expected to remain elevated due to the company’s business expansion plans. Also, given rising geopolitical risks, foreign currency fluctuations and the global impact of tariff policies, the company may witness subdued overseas revenues.

Nonetheless, BlackRock is well-positioned to capitalize on the acquisitions to expand its presence in the fast-growing private markets. This, alongside record AUM levels and product diversification efforts, is expected to support its financials. Inexpensive valuation and bullish analyst sentiments are other positives.

Hence, BlackRock deserves a place in your investment portfolio. Currently, BLK carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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