By Aaron Pressman
March 22 BlackRock, the world's largest money manager, hired Andy Stewart, head of one of Credit Suisse's hedge fund units, to bolster its own alternatives business as it shutters a direct private equity strategy.
Stewart will co-head New York-based BlackRock's hedge fund and private equity division alongside current leader Matt Botein, who will add the title of chief investment officer for alternatives, the firm said in a memo on Friday.
At the same time, BlackRock is closing down a direct private equity investing team it hired in 2011 which had run a similar business at Merrill Lynch. Nathan Thorne, George Bitar and Mandy Puri will leave the firm, spokesman Brian Beades said.
"We had a very strong direct private equity team but given our clients are looking to us for other fund of fund solutions, we are going to transition out of the direct PE business," Beades said in a statement.
The firm brought all its alternative strategies into one unit BlackRock Alternative Investors, or BAI, in 2010 under Botein. But performance has been mixed and some areas, like direct private equity, failed to attract much interest from investors.
Investors withdrew $5.5 billion more than added to the alternative unit's offerings last year after withdrawing $3.8 billion in 2011. The acquisition of Swiss Re Private Equity Partners, announced last July, added about $7.5 billion to BAI's fund of funds private equity business.
With the outflows and the acqusition, fees and other revenue at BlackRock's alternatives businesses totaled $968 million last year, up 12 percent from 2011. Assets under management hit $110 billion, up 5 percent.
Under the new structure, Stewart will focus on managing operations and business development while Botein will focus on investment performance and oversight, the staff memo from BlackRock President Robert Kapito and Chief Operating Officer Charles Hallac, said.
"These changes broaden the leadership structure of BAI as we seek to grow our investment and business management functions, as well as our client service capabilities," the memo said. There were no immediate changes to portfolio managers or account teams, the memo said.
The memo also highlighted some of the unit's recent successes. Retail investors added more than $1 billion to new alternatives mutual funds, the hedge funds business outperformed it benchmark by three percentage points in 2012 and a new real estate strategy has grown to over $1 billion.
Stewart previously headed Credit Suisse's liquid alternatives group which encompasses hedge fund, fund of hedge funds, index, credit and commodities products. In November, Credit Suisse appointed Bob Jain as head of its alternatives business including the liquid group. The firm declined to comment.
Stewart was formerly president and chief operating officer in the United States for Man Investments.