Hedge Funds, Private Equity Losses Burn BlackRock

Jan 22 2009 | 12:22am ET

BlackRock’s hedge fund and private equity co-investments took a big chunk out of its profits last year, the money manager said yesterday.

The firm wrote down $293 million on the value of hedge funds and private equity vehicles it invests in alongside its customer. All told, BlackRock’s net income plummeted 84% to just $53 million, with declines in the firm’s own alternative investments business also contributing to the decline.

Investors redeemed some $2.9 billion from BlackRock alternatives funds in the fourth quarter, pushing the firm’s performance fee income down 84% on the quarter to $23.7 million. BlackRock said that it was able to meet all withdrawal requests.

While the firm’s overall assets under management fell by just 3.6% last year, that had little to do with its alternatives business. The firm’s more conservative funds brought in $129.1 billion in new money, including $101 billion in toxic credit assets that BlackRock is managing on behalf of the U.S. government and four banks.

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