BlackRock plans a major expansion of its advisory and exchange-traded funds operations, particularly in Asia, now that it's nearly digested its acquisition of Barclays Global Investors.
The advisory business, BlackRock Solutions, is understaffed at present, in the view of Chief Executive Laurence Fink. "We see huge opportunities with BlackRock Solutions," he told investors during Wednesday's second-quarter earnings conference call. "We're hiring quite a few people in building it out."
Signaling both a hiring push and executive relocations, Fink said, "We can no longer have all of our leadership in the U.S. or pocketed in London. We need to expand heavily in Asia," and specifically cited Southeast Asia and Hong Kong as essential markets.
Noting more companies completed IPOs in Hong Kong than the U.S. so far this year, he said BlackRock needs to assemble more equity teams to attain "a more robust global footprint."
BlackRock says it will investment in growing its ETF platforms, in particular iShares, which was the heart of BGI's old business. The firm reportedly also is pushing its ETF business into Mexico.
The world's largest asset management firm, BlackRock recently reorganized into regional business units, similar to how most other global financial institutions manage their operations. It created regional units for the Americas, Asia- Pacific, and Europe, the Middle East and Africa (EMEA). Rohit Bhagat, who was global chief operating officer of BGI before it became part of BlackRock, is head of the Asia Pacific region. The company also recently named Mike Latham as global head of iShares, replacing Rory Tobin.
Compensation and benefits expense came in at $709 million for the second quarter, down 8 percent from the first quarter number but up 82 percent from second quarter 2009 (excluding $4 million of BGI integration costs). BlackRock said the year-over-year increase was due to more hires and a $154 million increase in incentive compensation, including a $35 million rise in stock-based compensation. Compensation totaled 35.4 percent of revenue in this year's first half.