BlackRock markets SDG-aligned co-investment fund to wealthy individuals

Future Generations Opportunities is a private equity strategy which will seek co-investments in Europe, North America and Asia.

BlackRock has begun marketing a UN SDG-aligned private equity co-investment fund to both institutional and individual investors in Europe: The BlackRock Future Generations Opportunities ELTIF.

The fund is classified as Article 8 under the EU’s Sustainable Finance Disclosures Regulation. It will invest across key themes including good health and well-being, climate, resources, education and financial inclusion in alignment with the United Nations Sustainable Development Goals. The firm is targeting between 25 and 35 investments over a four-year period and has a minimum investment ticket for investors of €125,000.

The fund is one of two launches unveiled on Thursday. Between them they are targting €1 billion. The other is BlackRock Private Equity ELTIF, which will allow individual investors to back buyout, growth and venture capital opportunities for a minimum investment size of €30,000, according to a statement.

Both funds will invest “alongside leading institutional private markets investors,” will invest across Europe, North America and Asia, and can invest across VC, growth and buyout opportunities, the firm said in statement seen by affiliate publication Private Equity International.

BlackRock’s stable includes a number of sustainability-focused private fund products, including a cross-asset class fund backing companies and projects owned or led by Black, Latinx or Native American teams and a climate-focused joint venture with Singaporean investor Temasek.

ELTIFs so far

BlackRock’s previous ELTIFs – its debut Private Infrastructure Opportunities ELTIF, which held a final close on €415 million in December, and Private Equity Opportunities ELTIF, which gathered more than €500 million on final close in April 2021 – required a minimum investment of €125,000.

“The challenges of the past for wealth clients [to get private markets exposure] – access, structure, education and convenience… We see that transformation happening across the board. We definitely applaud it, and we think it’s here to stay,” Edwin Conway, global head of alternatives at BlackRock, told Private Equity International.

He added: “With some of the local changes with regard to what clients can have access to… creating fully funded vehicles, having liquidity access points that are dissimilar to what the traditional 10, 12-year fund is – [these] structures are just going to win for the future.”

The BlackRock Private Equity ELTIF “offers a fully funded solution from launch, which entails only one payment from investors” and “a limited cash drag”, according to the statement. Capital raised for the vehicle will back between 25 and 30 co-investments across a two-year investment period.

BlackRock revealed plans for ELTIFs with a much lower threshold in February.

Commenting on the fully funded strategy for the PE ELTIF, West Lockhart, head of wealth and family offices for BlackRock Alternatives Specialists EMEA, told PEI at the time that the vehicle will have a single capital call. “We really see the market divided into two parts. One part of the market wants the closed-end structure, they can handle capital calls, and don’t want any cash drag. The other part of the market cares more about simplicity, access and ultimately can’t manage those capital calls efficiently.”

The launch of the vehicles closely follows the European Parliament’s approval of the amendments for ELTIFs, known as ELTIF 2.0, which have fewer restrictions in terms of diversification requirements, leverage and the ability to invest in funds of funds. The new regulation also has a broader scope on eligible assets as well as investments in non-EU assets, PEI previously reported (subscription or registration required).

The ELTIF is “quickly becoming the vehicle of choice in Europe”, BlackRock noted in its latest ELTIF report, estimating that the market will triple in value over the next several years, from €10 billion as of end-2021.

Education and training for wealth advisers and retail clients is a key plank of the firm’s push into investor channel. It launched its Alternatives Academy in February to provide advisers with a comprehensive educational course on investing in private markets.