In a strategic move to expand its financial services, BlackRock (NYSE:BLK) Funding, Inc., a subsidiary of BlackRock, Inc., has issued a total of $2.5 billion in unsecured notes. The offering, completed on Thursday, includes $800 million of 4.600% notes due in 2027, $500 million of 4.900% notes due in 2035, and $1.2 billion of 5.350% notes due in 2055.
The newly issued notes are guaranteed by BlackRock and were offered under an existing shelf registration statement. The proceeds are earmarked to partially fund BlackRock's upcoming acquisition of Preqin Holding Limited, a transaction expected to close before the end of 2024, pending regulatory approvals and customary closing conditions.
If the Preqin Transaction is not completed by September 2, 2025, or within five business days after a mutually agreed upon later date, BlackRock Funding will redeem the 2027 notes at 101% of their principal amount, plus accrued interest. In such an event, proceeds from the 2035 and 2055 notes will be redirected to general corporate purposes, including debt repayment.
BlackRock Funding retains the option to redeem the notes at any time before their respective maturity dates at a "make-whole" redemption price, with the possibility of redemption at par value starting one month prior to the 2027 notes' maturity, three months prior to the 2035 notes, and six months before the 2055 notes mature.
The indenture governing the notes includes standard event of default provisions and sets forth requirements for BlackRock in the event of a merger, consolidation, or asset sale.
In other recent news, the cryptocurrency sector has marked another milestone with the launch of the first U.S. exchange-traded funds (ETFs) tied to ether, the second-largest cryptocurrency by market capitalization. ETFs from prominent financial institutions, including VanEck, Franklin Templeton, Fidelity, 21Shares, Invesco, and BlackRock, have started trading on various exchanges. This development follows the successful introduction of nine U.S. spot bitcoin ETFs earlier this year. Despite ether ETFs potentially not drawing as much capital as their bitcoin counterparts, they are seen as crucial in the development of the cryptocurrency market.
On the other hand, BlackRock, the world’s largest asset manager, has been the focus of several noteworthy developments. The company reported a notable rise in its second-quarter earnings, surpassing expectations with an adjusted earnings per share (EPS) of $10.36. The firm's revenue saw an 8% increase, while assets under management (AUM) experienced a 13% surge, reaching $10.6 trillion.
Analyst firms Argus, Citi, and Evercore ISI have all raised their price targets for BlackRock, citing confidence in the company's growth prospects. These adjustments follow BlackRock's strong performance and strategic moves, including the successful launch of its bitcoin ETF, which has rapidly grown to encompass $20 billion of net assets.
InvestingPro Insights
As BlackRock Funding, Inc. forges ahead with its strategic financial initiatives, its parent company BlackRock, Inc. (BLK) continues to display a robust financial profile. According to real-time data from InvestingPro, BlackRock has a market capitalization of $126.6 billion and a solid P/E ratio of 21.03, which reflects investor confidence in its earnings potential. The company's revenue has grown by 7.68% over the last twelve months as of Q2 2024, underscoring its ability to increase earnings. Additionally, BlackRock's commitment to shareholder value is evident with a dividend yield of 2.44% and a history of raising its dividend for 14 consecutive years, a testament to its financial health and stable cash flow.
InvestingPro Tips highlight that while BlackRock is trading at a high P/E ratio relative to near-term earnings growth, indicating a premium valuation, analysts predict the company will be profitable this year, which may justify the higher ratio. Moreover, with the company profitable over the last twelve months and maintaining dividend payments for 22 consecutive years, investors might see BlackRock as a resilient investment in the financial sector.
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