BlackRock: "Many Investors Are Reducing Equity Holdings and Switching to Private Loans"

Four Alternative Investment and Secondary Market Experts Attend
Private Market Popularity Growing
"High Returns, Low Risk, Attractive Investment Assets"

BlackRock, the world's largest asset management firm based in the United States, held an event in Korea to discuss the future of private lending and the secondary market.

BlackRock held a press briefing on the 26th at the Fairmont Ambassador Seoul in Yeouido, Seoul, under the theme "2024 Global Private Market Trends and Investment Outlook." From the left, Stephan Caron, Head of Private Credit Investments Europe at BlackRock; Phil Tseng, Co-Head of Private Credit North America at BlackRock and Chairman of BlackRock TCP Capital Corp (TCPC); George Maltezos, Head of Alternative Investments Asia-Pacific at BlackRock; and Lisa Sun, Co-Head of Secondaries and Liquidity Solutions (SLS) at BlackRock.
[Photo by Insight Communication]

On the 26th, BlackRock held a press conference at the Fairmont Ambassador Seoul in Yeouido, Seoul, under the theme "2024 Global Private Market Trends and Investment Outlook." Four representatives attended: George Maltezos, Head of Alternative Investments Sales for Asia-Pacific at BlackRock; Lisa Sun, Co-Head of BlackRock Secondary and Liquidity Solutions (SLS); Phil Tseng, Co-Head of North American Private Lending at BlackRock and Chairman of BlackRock TCP Capital Corp (TCPC); and Stephan Caron, Head of European Private Lending Investments at BlackRock. They provided insights into the future outlook of private lending and the secondary market in Asia and Europe.

George Maltezos, who introduced himself as being based in Singapore and responsible for capital raising in the Asia region, said, "We are raising capital from investors in the Asia-Pacific region to seek investment opportunities in the private market." He explained, "BlackRock manages approximately $330 billion in assets, including alternative and private assets, and has invested $11 billion solely in the Asia region." He emphasized BlackRock's strong investment capabilities by stating, "We have made significant investments in Asia over the past three years and are currently exploring attractive opportunities in this region." He highlighted, "The private market remains unlisted in the long term, and as traditional asset allocation models are being disrupted, investors are turning their attention to the private market."

Lisa Sun explained BlackRock's role in the secondary market. She said, "The private asset market is known for its lack of liquidity, but we play a role in providing liquidity through the secondary market." Secondary investment refers to injecting new capital into previously invested assets, structures, and situations to reorganize the investment cycle and restructure ownership. According to BlackRock, the global secondary market size was $115 billion in 2023 and is expected to grow by 15-20% this year. Lisa stated, "Prices are formed at about 90% of net asset value for buyouts and around 50-60% for venture capital." She also explained that Asian investors mainly sell European or U.S. funds, while sales of Asian funds are rare.

Phil Tseng, who has managed direct lending for over 20 years in the U.S., introduced investment opportunities. Direct lending refers to asset managers using funds to lend directly to companies, a form of private lending. Phil Tseng said, "The current market environment offers many opportunities for investors, and the return on investment assets in the private lending market is around 10-14%." He added, "BlackRock has sufficient experience to respond to the uncertain environment ahead." He also noted, "Private lending offers high returns with low loss rates, so many investors are reducing their equity allocations and moving into private lending."

Stephan Caron explained the consolidation trend among private lending managers in the European market and the increasing allocation of investors to private assets. He said, "Private lending in Europe is growing, and investors are increasing their allocations to private lending." He forecasted, "Although the European private lending market is smaller than that of the U.S., it is showing steady growth, and the market size will expand further as more investors enter." He also stated, "Due to interest rate cuts by the European Central Bank, mergers and acquisitions (M&A) are increasing, and Korean investors are expected to increase their allocations to North American and European markets in response to these changes." He highlighted four mega trends to watch: ▲Partial replacement of banks' roles by private lending, ▲increased infrastructure investment demand due to the transition to a low-carbon economy, ▲changes in real estate investment driven by increased demand for elderly care facilities, and ▲the artificial intelligence (AI) revolution.