BlackRock spends $1bn acquiring Aperio’s tax-efficient strategies

Aperio calls BlackRock “like-minded fiduciary… with long-standing roots in tax-efficient indexing” and “a commitment to sustainable investing”

BlackRock will acquire $36bn California-based asset manager Aperio Group for $1.05bn (€0.8bn), in a deal that will enhance its exposure to ultra-high net worth (UHNW) clients.

According to BlackRock, this acquisition should increase its separately managed accounts (SMAs) assets by roughly 30%, to more than $160bn. Unlike mutual fund investors, SMA investors own assets directly in their name, which has a number of tax implications and advantages.

BlackRock has bought Aperio from private equity house Golden Gate Capital and Aperio employees. It is a cash deal. 

ESG features heavily in the announcement made today. Aperio Group focuses on UHNW investors and their managers, for whom they design customised tax-optimised indices and portfolios “to reflect each client’s unique risk, tax, and personal values preferences”.

It describes itself as having “pioneered individually customized ESG portfolios that enable investors to elevate the purpose of their wealth and make an impact on causes deeply important to them”. It has an 11-strong ESG team and has launched two SRI-ESG strategies in recent years: Jewish Values and Green REIT.  

In a joint statement, Aperio Co-heads, Liz Michaels and Ran Leshem, said they have found “a like-minded fiduciary” in BlackRock “with long-standing roots in tax-efficient indexing” and “a commitment to sustainable investing”.

Aperio will trade under its own brand as part of the deal, but will be integrated within BlackRock’s US Wealth Advisory business. Martin Small, head of BlackRock’s US wealth advisory business said: “The wealth manager’s portfolio of the future will be powered by the twin engines of better after-tax performance and hyper-personalization.”

Separately, UK-based think tank and NGO the Tax Justice Network (TJN) has published the inaugural edition of its State of Tax Justice annual report, analysing global tax abuse and governments’ efforts to tackle it.

TJN estimates the world is losing over $427bn in tax revenues yearly due to international tax abuse, of which “$182bn is lost to wealthy individuals hiding undeclared assets and incomes offshore, beyond the reach of the law”.

TJN has also called for the introduction of a wealth tax aimed at funding the response to the Covid-19 pandemic and addressing now exacerbated term inequalities. “The pandemic has already seen an explosion in the asset values of the wealthy, even as unemployment has soared to record levels in many countries,” TJN stated. 

To find out more about taxation as an ESG and SDG issue, see RI coverage here.