Hedge Funds A Boon For Booming BlackRock

Jan 28 2010 | 12:01pm ET

Hedge funds are proving good business for BlackRock.

The world’s largest money management firm said its fourth quarter income nearly quintupled, buoyed by the firm’s acquisition of Barclays Global Investors and by a fivefold increase in hedge fund performance fees.

New York-based BlackRock said it fourth quarter earnings were $256 million, up from $52 million in the year-earlier period. Revenue jumped 45% to $1.54 billion, thanks in no small part to the huge increase in performance fee income, which hit $125 million in the quarter.

The deal for BGI, the world’s 10th-largest hedge fund manager with some $17 billion in hedge fund assets—and more than $1 billion in other assets—helped BlackRock double its assets under management to $3.35 billion. The BGI acquisition, which closed last month, added $94 million in quarterly income, although that was offset by $108 million in after-tax costs related to the purchases. BlackRock paid $13.5 billion for BGI.

Investors poured an additional $38 billion into BlackRock’s and BGI’s funds in the fourth quarter, and have committed another $39.7 billion through the first three weeks of January.

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