Larry Fink, the founder of BlackRock, was a California-born Jew. After earning an MBA from the University of California, his first job was at the renowned investment bank First Boston.
While at First Boston, Fink created a new financial product, the mortgage-backed securities (MBS), laying the foundation for subsequent financial innovation. Yes, the CDS that triggered the subprime mortgage crisis is a type of MBS, originally invented by Larry Fink.
In 1988, Larry Fink joined forces with Stephen Schwarzman, founder of Blackstone Group, to establish Blackstone Financial Management, which later became BlackRock.
However, as the company grew, differences between Blackstone and BlackRock gradually emerged.
Ultimately, Schwarzman divested himself from his partnership with BlackRock for $240 million.
Since then, BlackRock has experienced significant growth under Fink's leadership.
Indeed, BlackRock also seized opportunities during the subprime mortgage crisis, achieving explosive growth.
From Bear Stearns to American International Group (AIG), BlackRock has helped these companies, as well as the U.S. Treasury and the Federal Reserve, deal with, analyze, and liquidate the "toxic" assets on their books. BlackRock,
led by Larry Fink, secured this significant business not only because of its deep expertise but also, more importantly, its "Aladdin" system.
Aladdin, short for "Asset, Liability, Debt, and Derivative Investment Network," is an electronic platform with powerful data processing and analysis capabilities.
Launched in 1988, the platform was initially used internally by BlackRock.
However, BlackRock recognized a significant market demand for the product and began selling it to the public in 1999.
During the subprime mortgage crisis, BlackRock effectively hedged its risks and profited using Aladdin, a stark contrast to the heavy losses and even bankruptcy suffered by Wall Street investment banks like Lehman Brothers.
During this period, BlackRock used the Aladdin platform to rapidly analyze asset status and develop distressed asset disposal plans for the U.S. Treasury, the Federal Reserve, and Wall Street giants like JPMorgan Chase and American International Group. It also provided critical consulting services to sovereign wealth funds in countries like Japan, Norway, and Singapore, achieving widespread recognition.
Baron knew that during the 2009 European debt crisis, the European Central Bank, the Irish, and Greek governments all began using Aladdin to respond.
The system subsequently became widely adopted, even for BlackRock's competitors like Vanguard, Blackstone, and State Street, which became known as a "foundational platform" in the financial sector.
Following this, BlackRock would acquire over $450 billion in distressed assets under management and secure $400 billion in financing from the U.S. government to address even larger amounts of distressed assets. In a few years, the group's assets under management would reach $10 trillion, making it the world's largest asset management group.
It's safe to say that by then, people's lives will be constantly connected to this group...
Although Baron also has confidence in DS Group, he's open to exchanging equity with these future top investors to deepen their "friendships" before BlackRock's rise.
Furthermore, not only has DS Group fully transformed into an asset management group, but the three parties will also each provide one board member to the other, creating a check on each other.
Baron also has another benefit.
Vanguard, BlackRock, and State Street have agreed to sell their Costco shares to a consortium consisting of Argos Retail Group and Caesars Capital—but they will have to pay a 35% premium over the current share price.
Even so, due to Costco's declining stock price, the acquisition price is significantly lower than when Baron was considering acquiring Costco in June of this year. After continuing to acquire Costco shares in the secondary market, Argos Retail Group's stake in Costco would exceed 50% if the acquisition of these institutional holdings were completed.
This prompted Berkshire Hathaway to finally relent, agreeing to sell its 45 million Costco shares to Argos Retail Group.
This enabled Argos Retail Group to launch a full acquisition of Costco and complete its privatization and delisting offer.
The acquisition of Costco had been a long-planned move. After contacting Costco's management and receiving assurances of stability and minimal management changes after the acquisition, Costco's management also expressed its preference for an Argos Retail Group acquisition.
After all, it was clear that DS Group's deep pockets and support would secure their future development plans.
Therefore, the Costco acquisition now only awaited shareholder approval and regulatory approval from US regulators.
"I heard you're also planning to acquire AIA, Your Highness."
As mentioned earlier, BlackRock analyzed and liquidated the securities assets of American International Group. Especially after the government takeover, with the support of the Treasury and the Federal Reserve, BlackRock became deeply involved in AIA's assets. Therefore, it's not surprising that they'd be privy to some of the inside scoops surrounding Baron's acquisition of AIA.
"After all, they need the capital to weather the storm, and I'm somewhat interested in AIA,"
Baron said with a smile.
"Actually, I'm also very interested in those 'distressed assets,' Mr. Fink, but unfortunately, Paulson and the others won't hand them over to us..."
"We're more specialized in these matters, and it's not an easy task..."
Well, Baron was just saying that casually. After all, DS Group is British capital, and being able to participate in certain asset acquisitions already gives it a significant advantage over Huaxia Capital.
As for the "preferential treatment" afforded by local capital, that's purely theoretical.
Of course, he does have an advantage over Wall Street capital: the trust of the Middle Eastern tycoons.
Previously, Kuwait Investment Authority President Badr had represented several sovereign wealth funds in a request to increase their investments in DS Group funds. The reason was that their Wall Street investments had been severely damaged by the subprime mortgage crisis.
Baron initially didn't care, as he wasn't short of funds. But then he realized that if he didn't take the money, it would inevitably end up in SoftBank, so the issue kept coming up. Baron hadn't wanted to
continue with a profit-sharing model like the Global Industrial Investment Fund I. Furthermore, the Kuwait Investment Authority and the Saudi Public Investment Fund had already withdrawn their funds from GII Fund I, leaving their own funds in GII Fund II.
After the subprime mortgage crisis, these wealthy Middle Eastern countries were seeking stability, so they invested in GII Fund II through fixed-income investments... Well, with the dissolution of GII Fund I, there's no longer a GII Fund I or GII Fund II; there's only the GII Fund.
The first wave of Middle Eastern sovereign wealth funds invested a total of $10 billion, and they will continue to expand their investments—they will gradually withdraw their investments elsewhere...primarily in the United States, and then invest them in the GII Fund.