BlackRock stake in Sports Illustrated

BlackRock has become the largest shareholder of the company that owns brands including Sports Illustrated.

Sports Illustrated is now in the BlackRock stable. Picture: AP

BlackRock has become the largest shareholder of the company that owns brands including Sports ­Illustrated, Nine West and Aéropostale in the first deal for the investment company’s new private-equity fund.

BlackRock is taking a roughly $US875 million ($1.29 billion) stake in Authentic Brands Group that values the closely held brand development, marketing and entertainment company at more than $US4bn, including debt.

BlackRock announced the deal on Sunday, confirming an earlier report by The Wall Street Journal. It didn’t disclose details.

BlackRock is set to supplant private equity firm Leonard Green & Partners as Authentic Brands’ largest shareholder. ­Leonard Green and other shareholders, including private-equity firms General Atlantic and Lion Capital, will remain invested but will sell down their stakes to make room for BlackRock. Authentic Brands’ management, led by CEO Jamie Salter, will also continue to own a significant stake.

BlackRock, the world’s biggest money manager, has been trying to diversify away from exchange-traded and index funds, which comprised two-thirds of its roughly $US6 trillion in assets and were responsible for about 40 per cent of its revenue in 2018, and into business lines that allow it to lock up money for longer and charge higher fees.

Long Term Private Capital, as the BlackRock private-equity fund is known, was designed to emulate sovereign-wealth funds and other such pools by allowing its managers to hold bets for as long as they desire. The model sets it apart from the majority of private-equity funds, which are required to sell off assets and return capital to investors within a set period of time.

But the experiment has been slow to get off the ground, in part because BlackRock began pitching it to investors before a full team was in place to staff it, the Journal has reported. The firm, which set out last year to raise at least $US12bn, said in April it had accumulated $US2.75bn.

Other big asset managers, drawn to the higher fees and returns private equity has traditionally offered, are watching BlackRock’s venture closely. Vanguard Group recently had discussions with a handful of private-equity firms as the indexing giant weighs whether to partner with them to offer their funds to its investors, the Journal has reported.

Founded in 2010 by Mr Salter, Authentic Brands owns and licenses a global portfolio of 50 entertainment and lifestyle brands responsible for $US9.3bn in annual retail sales. The company has roughly doubled its sales and earnings over the past two years.