Investment giant BlackRock has raised $800 million – toward a $1 billion target – for a fund that will invest in companies and projects owned or led by Black, Latinx or Native American teams.
The fund will make direct investments across private equity, private credit, infrastructure, real estate and “other niche asset classes”, BlackRock said in a statement today. The statement continued: “Launched in 2021, this return-seeking fund looks to uncover compelling investment opportunities in undercapitalized companies and communities that are poised for growth.”
BlackRock is far from the only firm in the market channelling capital to underserved minority communities. New York-based firm Trident, for example, is raising $250 million to make private equity investments with a focus on diverse-led businesses. Brightwood Capital Advisors is planning to raise up to $2 billion to invest in small and medium-sized companies, and particularly diverse-owned enterprises. Meanwhile, pension funds such as Illinois Municipal Retirement Fund and Massachusetts Pension Reserves Investment Management frequently allocate pools of capital to diverse-owned asset managers. What makes BlackRock’s fund stand out is the fact that it can invest across asset classes.
“Black, Latinx, and Native American people face a number of systemic barriers in accessing the market and acquiring the capital necessary to drive economic growth and wealth creation in their communities,” said Edwin Conway, global head of BlackRock Alternative Investors (pictured), “The BlackRock Impact Opportunities Fund aspires to change the way institutional capital flows to communities of colour, and is just one step BlackRock is taking with our clients and partners to address this significant investment opportunity.”
The fund will invest along thematic lines, such as housing, financial inclusion, education, healthcare, “inclusive transition” and digital connectivity.
So far, the fund has drawn capital from corporations, pension funds, insurers, endowments, foundations and family offices, the firm said. Examples include Costco Wholesale, PayPal, Lincoln Financial Group, insurance companies State Farm and Anthem, and the W.K. Kellogg Foundation.
BlackRock has completed three deals for the fund. In September 2021, it invested in Tricolor, a financial technology company that uses artificial intelligence to sell and provide financing for used vehicles to underserved Latinx customers. In February this year, it partnered with Black-owned and operated real estate firm BRP Companies to invest in a residential development in New York state. This month, BlackRock said, it has partnered with Black-owned financial sponsor Eastwood Capital Partners to invest in the development of 70 fitness franchises across Dallas and Houston in Texas, as well as Southeast Florida.
This vehicle appears to be separate from BlackRock Private Equity Impact Capital, a fund registered with regulators in Luxembourg by the firm last year. In a conversation BlackRock’s Conway earlier this year, he declined to comment on impact products in market.