BlackRock (BLK) inked a deal with Baringa Partners to acquire and unite Baringa’s best-in-class Climate Change Scenario Model with BlackRock’s Aladdin Climate technology to boost climate analytics. Financial terms of the deal have been kept under wraps.
BlackRock is a U.S.-based, multinational investment management company and the world’s largest asset manager with $8.67 trillion in assets under management (AUMs) as of January 2021. Shares of the company have jumped 56.6% over the past year.
Baringa Partners is a global, independent business and technology consultancy, developing market-leading climate scenario modeling capabilities with experience of more than 20 years. The Climate Change Scenario Model is used by clients with assets totaling over $15 trillion.
The deal will combine Baringa’s Climate Change Scenario Model with BlackRock’s Aladdin Climate, its end-to-end portfolio management, risk management, and operations platform. The combination will enable the redeployment of capital across the global economy, speeding up the transition to net-zero emissions, driven by increased adoption by financial services, governments, regulatory bodies, and clients across all sectors. (See BLK stock chart on TipRanks)
Through the acquisition, both companies will utilize their expertise to create climate risk models, with Aladdin Climate as their base. The deal will also lead to innovating other climate analytics solutions, helping institutions with climate risk, and formulating net-zero strategies.
Notably, an increasing number of organizations are seeking solutions to help assess climate risk, especially with increased regulatory requirements for climate-related disclosures. As of the first quarter of 2021, more than $2.3 trillion in AUMs have been put into sustainability funds globally to develop sustainable investment strategies.
Sudhir Nair, Global Head of the Aladdin Business at BlackRock commented, “Investors and companies are increasingly recognizing that climate risk presents investment risk. Through this partnership with Baringa, we are raising the industry bar for climate analytics and risk management tools, so clients can build and customize more sustainable portfolios.”
He further added, “The integration of Baringa’s models and the ongoing collaboration between our firms will enhance Aladdin Climate’s capabilities, helping our clients understand transition risks in more sectors and regions than ever before.”
Morgan Stanley analyst Michael Cyprys recently reiterated a Buy rating on the stock.
Cyprys commented, “We come away from BLK’s 2021 Investor Day incrementally more positive on BLK’s ability to deliver strong organic growth powered by their unrivalled product set, vast distribution pipes and technology edge, and to drive positive operating margin expansion. Debunking “too big to grow” fears, we see significant growth ahead for BLK with under 10% share of industry assets and revenue vs. other industries where the top firm has over 40%.”
Overall, the stock has a Strong Buy consensus rating based on 13 unanimous Buys. The BLK average analyst price target of $930.42 implies 7% upside potential from current levels.
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