BlackRock’s top shareholder sells out

(Image credit: BlackRock share price at NYSE © Michael Nagle/Bloomberg via Getty Images)

published 14 May 2020

PNC Financial, BlackRock’s top shareholder, has said that it will sell its 22% stake in the investment management company, which is currently worth $17bn, says the Financial Times. BlackRock’s share price has outperformed its listed US fund-management peers for years as the company has “grown and diversified its revenues, in part by expanding into technology”. PNC’s stock price jumped by 6% as investors in the bank welcomed the “long awaited” move, which comes with “tax advantages” that may disappear in the near future. It will also allow it to bolster its balance sheet and “pursue potential acquisitions”.

PNC may be leaving BlackRock for good, but the investment, which cost it just $240m in 1995, has already produced “a steady stream of fees and profits from the asset manager’s robust growth”, say Dawn Lim and Orla McCaffrey in The Wall Street Journal. More broadly, the rise of BlackRock, which manages $6.5trn in assets, is also a sign of how asset managers “have gained ground on the biggest Wall Street banks”. Its reach spans markets from exchange-traded funds to private equity.

PNC’s decision to sell its stake in BlackRock removes a regulatory “headache” for both companies, says Antony Currie on Breakingviews. Still, even after this sale, BlackRock’s sheer size means that it could still face calls “for greater scrutiny”. What’s more, by selling its stake, PNC is “giving up a diversifying income stream that accounted for 15% of earnings last year”; BlackRock is losing a big shareholder whose support it “could count on”.