Published On: Thu, Jun 22nd, 2017

Reports: BlackRock Acquires Stake in European Robo-Adviser

BlackRock Inc. has acquired a stake in Scalable Capital, a European robo-adviser, according to sources familiar with the matter.

The fund giant has purchased a minority stake in the company after leading a 30 million euro funding round. The funding round was conducted alongside Scalable’s two German venture capital investors.

The investment is expected to close in the third quarter of the year, pending approval by regulators. Patrick Olson, COO of BlackRock’s EMEA, will also join Scalable’s board.

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Olsen said the decision to invest in Scalable came amid increased demand among investors to access their holdings using new technologies.

“This trend is prompting strong demand from European financial institutions – including banks, insurers, wealth managers and advisory firms – for high-quality technology-enabled investment solutions,” said Olsen.

Scalable was founded in 2014 and has offices in London and Munich. The company has 250 million euros in assets from its 6,000 retail investors. Scalable’s platform supports multiple languages and currencies which can operate under different regulatory and tax schemes.

BlackRock, the world’s largest money manager, plans to help Scalable bring in institutional and corporate clients. Thus far, Scalable has focused only on clients in Germany and the UK. The company has plans to expand to other regions of Europe.

Robert Goldstein, BlackRock’s Chief Operating Officer and head of BlackRock Solutions, says the firm chose to invest in Scalable because it “wants to provide institutional-quality portfolio construction to a much larger audience than has traditionally had access to this type of rigorous advice.”

BlackRock ultimately plans to combine Scalable’s services with its latest product offerings, including iRetire and Aladdin Risk for Wealth Management. Aladdin is BlackRock’s primary portfolio management system. The Risk for Wealth Management arm provides advisers with risk management, modeling and portfolio construction solutions.

News of the investment in Scalable comes after Larry Fink, BlackRock CEO, told Reuters that he was considering four small acquisitions to boost its investment and technology expertise.

BlackRock has in the past funded other robo firms. In 2013, the company invested in Personal Capital, a digital wealth management company. In 2015, it acquired FutureAdvisor in a $150 million deal.

Robo-advisors are software programs that use algorithms to carry out the same tasks as physical financial adviser firms, but at a lower cost.

The robo-adviser industry is expected to expand to $435 billion by 2018, Aite Group estimates. The U.S. has the most developed robo-adviser market, but Asia and Europe are growing quickly.

Author: Jacob Maslow

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