Why acquire the private equity database Preqin? BlackRock's ambition: private equity "indexing"

On Monday, according to sources cited by the media, BlackRock, the world's largest asset management giant, has agreed to acquire the UK private data company Preqin for £2.55 billion (approximately $3.2 billion) in cash. This marks BlackRock's second significant acquisition in the private equity market in the past six months.

As for why the acquisition of Preqin? BlackRock CEO Larry Fink provided an answer: Through this acquisition, BlackRock is able to apply the indexing model to the rapidly growing private equity market.

Fink stated on Monday, "We believe that we can index the private equity market, just as indexing has become the lingua franca of the mutual fund market. We envision applying the principles of indexing, and even introducing iShares (BlackRock's ETF brand), into the private equity market."

Following Fink's logic, indexing and data will ultimately drive the "democratization of all alternative investments." With the acquisition of Preqin, BlackRock aims to increase clients' access to private equity assets in the coming years through data and analysis.

Analysts point out that BlackRock's business focus has undergone several transitions, from focusing on index management and ETFs to now entering the realm of private equity indexing. One key factor driving this shift is the significant growth potential of the private equity market.

BlackRock projects that by around 2030, the scale of private equity assets will exceed $40 trillion, prompting a surge in demand for private equity asset data. The market size for related private equity data demand is expected to increase from the current approximately $8 billion to $18 billion by 2030.

Fink stated that the rise of data, benchmark indices, and risk analysis software has transformed the mutual fund market, making it more open to investors and increasing transparency in performance and return-driving factors.

"The mutual fund market has proven itself capable of creating tremendous value for clients and shareholders. Our goal is to achieve this in the private equity market, where data, analysis, and indexing businesses are far less mature than in the mutual fund market."

The transaction for BlackRock's acquisition of Preqin is expected to be completed by the end of the year, subject to regulatory and other necessary approvals