BlackRock looks to make Aladdin the ‘language of portfolios’

Larry Fink tells investors that BlackRock will use the eFront platform to add ‘sustainability sleeves’ to the Aladdin system.

BlackRock has said it wants investment operations platform Aladdin to become the ‘language of portfolios’, as its chief executive reiterates that technology remains a key differentiator for the behemoth institution.

The asset manager’s CEO, Larry Fink, told investors on BlackRock’s most recent earnings call that the vast majority of the firm’s technology revenues come from its institutional Aladdin capabilities, which sets the standard in investment management technology. 

“Our long-term strategy is to provide technology for much of the asset management value chain as possible and make Aladdin the language of portfolios,” Fink said. “Demand remains strong for Aladdin and our technology capabilities, and we expect growth will be driven by expanding its capabilities to existing clients, attracting new clients, to inorganic growth, including eFront and the growth of our client’s businesses as they scale themselves.”

BlackRock acquired Paris-based eFront last year and combined its platform, which offers technology for due diligence and portfolio planning, performance and risk analytics, with Aladdin. eFront’s platform provides technology for the alternative investment lifecycle across various alternative asset classes.

Fink added on the earnings call that the acquisition of eFront will support growth in its illiquid alternative business, with the deal allowing BlackRock to add ‘sustainability sleeves’ to the Aladdin system. Sustainable investing remains a key focus for the asset manager. 

“The language of portfolio is becoming more and more real and we’re committed to that. This is why we believe we have to add sustainability sleeves to Aladdin and making sure that our clients and our investors at BlackRock can look at sustainability as one of the key investment risk going forward,” Fink said.

“I’m looking back now with our eFront acquisition, and I don’t even know how we were able to operate without having those sleeves now. We’ve been spending years talking about the need with our investors to have more illiquids and now we have the technology to be helping them do so.”

BlackRock’s quarterly technology services surged 35% year-on-year in the fourth quarter of 2019, with full-year technology revenues up 24% to $974 million, driven by continued growth of Aladdin and the impact of its eFront acquisition.