Private Markets: Learn more about Alternatives | BlackRock

Running in alternate directions

More and more investors are shifting to alternative investments to boost returns, generate income, provide diversification from traditional investments and achieve their goals. As allocations grow, alternatives are playing a critical role in portfolios.

Alternatives 101

01

Traditional v Alternatives

Broadly there are two types. Firstly, private assets such as private equity, private credit, infrastructure and private real estate. They are more complex and less frequently traded than equities and bonds. Hedge funds, the second type, operate mainly in public markets and tools such as short-selling and leverage.
02

Traditional investments

• Highly liquid
• Assets in public market
• High correlation to markets
• Passive shareholders
• Returns driven by beta with lower dispersion among investors
03

Alternative investments

• Potentially illiquid
• Access private and public markets
• Can amplify returns over public markets
• Lower correlation to markets
• Active shareholders
• Returns primarily driven by alpha with high dispersion among managers

Types of alternatives

Trees growing

Private equity

Investment into a private, non-listed company with the aim to bring about some sort of change in a private business. Private equity represents investments in different stages across a company life-cycle, from early-stage venture capital to later-stage growth investing and corporate finance.

Person rowing

Private credit

Lending (largely to corporations and small businesses) done outside the traditional channels of bank lending and the public (syndicated) debt markets. The broad term of “private credit” encapsulates a wide range of strategies such as direct lending, as well as distressed, opportunistic, mezzanine and venture (among others).

Man scaling rock

Hedge funds

Pooled investment funds that trade relatively liquid assets and can be used as a diversification tool. The investment strategies can vary but typically seek to produce return while mitigating downside risk.

Building structure

Real Estate Equity

The most common real estate sectors include office, residential, industrial & logistics and retail. Investors can access real estate investment through public markets (REITs listed on public exchanges) or through private markets (equity or debt funds).

construction workers working on a roof

Infrastructure

Infrastructure is the basic system that undergirds the structure of an economy - covering a range of sectors, including energy, transport, communication networks, water and waste, and social infrastructure. It is a central element in all aspects of economic and social activities, the green transition and successful sustainable development.

BlackRock’s alternative platform

$58

billion private debt client assets

$41

billion private equity client assets

$30

billion infrastructure client assets

$25

billion real estate client assets

^{*Source: BlackRock, 31/3/24. Dollars refer to USD}

Why choose alternatives?

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Private equity represents investments in different stages across a company life-cycle, from early-stage venture capital to later-stage growth investing and corporate finance.

Types of private equity exposure

Direct PE fund

Raised and managed by a private equity firm to invest in underlying companies.
Potential benefits: Direct access to GPs, and the ability to diversify across GPs and strategies. General Partner (GP), an investment entity or individual, makes the investment decisions and manage the day-to-day operations of a fund.
Considerations: Investors are responsible for manager due diligence, and direct PE funds typically have high minimum investments.

PE fund of funds

Pools capital to invest in several other direct private equity funds and co-investments.
Potential benefits: Greatest diversification of all private equity exposures, and smaller investment requirements.
Considerations: Potential for over-diversification and limited contact with GPs of underlying funds. This can be mitigated by delegating control to an experienced PE manager.

Direct co-investment Fund

Executes minority investments directly in companies alongside lead sponsors.
Potential benefits: Greater diversification vs. a direct PE fund and potential for higher returns and fee savings.
Considerations: Quality of the co-investment manager’s deal flow and transaction expertise of the manager.

Partnerships in action

BlackRock partners with companies that possess deep local operational knowledge to unlock private market investment opportunities in Australia and the wider Asia Pacific region.

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Speakers

Hamish MacDonald, Head and CIO of APAC Real Estate, BlackRock

Alastair Nash, CEO, Wentworth Capital

[Teaser]

Hamish You can see thematically we're actually leaning into what is often called alternative sectors and, in some cases, called social infrastructure. Real asset investors leaning more and more into infrastructure assets, if we can find real estate that looks like infrastructure from a cash flow perspective, then we think that that's going to have a deep liquid exit.

[Partnerships in Action Intro]

Hamish Alastair, we've known each other for coming on 15 years now. We've worked together for nearly five years.

Hamish And we are very, very proud of the portfolio that we've built together with Urban Logistics Co. We had an absolute alignment of, of interests as partners going into that strategy. Onto our new thesis, and this is in life sciences where we have recently done a deal to establish a new operating platform called Area 53. I'm very proud to say with Wentworth Capital and we've bought two seed assets in Sydney. Can you tell us a little bit about the thesis? Why life sciences.

Alastair It is a sector that, as you mentioned has played out offshore. And there's a lot of growth in the Australian context. There is no focused, pure play life science real estate platform, but converse to that, there is a very vibrant and healthy life science sector. there's a number of universities that have huge requirements for lab space and office space, but not just the universities. It's corporates, government, venture capital, a whole ecosystem of tenants that that interact with each other So that really began the exploration phase of the strategy. And it felt like a very natural follow on to what we've been doing together in logistics.

Hamish Specifically, what types of investment opportunities are you looking at in the life sciences space in Australia?

Alastair The most active at the moment is targeting REITs that need to raise capital to fund development pipelines The second area where we're getting a lot of traction is with the universities themselves. They all have large life science programs and ambitions around life science, but don't necessarily have the capital to invest into the infrastructure to provide that.

Hamish As a private equity real estate investor, why do you choose BlackRock to partner with in those circumstances?

Alastair A number of reasons. Speed of execution has been everything. We definitely benefited from the first mover advantage in last mile logistics, and we are now benefiting from the first mover advantage in life science. Having a capital partner that has global perspectives has seen this play out in other markets. Therefore, has high conviction, can mobilize large pools of capital and move quickly, allows us to take advantage of these very compelling opportunities.

Alastair And following on from the trend around global insights, what else are you and the BlackRock platforms seeing globally that could be applicable to the Asian market?

Hamish We definitely see a continued path to finding sectors that have been well established and are successful in these Western markets and bringing them down into Australia or at least finding where those assets are in Australia and then aggregating those. We need to find sectors that have got good growth prospects at the same time. So we're really looking for sectors that A. Have strong supply and demand prospects; B. Are going to be deeply in demand by large scale global investors at our exit and; C. Are quite new or nascent in their journey in the Australian context. So we look at sectors like childcare centers, for example. We like sectors like self-storage if we can find a way to access it. And so you can see thematically we're actually leaning into what is often called alternative sectors and in some cases called social infrastructure.

Important information

This material is prepared by BlackRock and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of November 13, 2024, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. This material is intended for information purposes only and does not constitute investment advice or an offer or solicitation to purchase or sell in any securities, BlackRock funds or any investment strategy nor shall any securities be offered or sold to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Investment involves risks. Past performance is not an indication for the future performance.

In Australia, issued by BlackRock Investment Management (Australia) Limited ABN 13 006 165 975, AFSL 230 523 (BIMAL). This material provides general information only and does not take into account your individual objectives, financial situation, needs or circumstances. Before making any investment decision, you should assess whether the material is appropriate for you and obtain financial advice tailored to you having regard to your individual objectives, financial situation, needs and circumstances. Refer to BIMAL’s Financial Services Guide on its website for more information. This material is not a financial product recommendation or an offer or solicitation with respect to the purchase or sale of any financial product in any jurisdiction.

In Hong Kong, this material is issued by BlackRock Asset Management North Asia Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.

In Singapore, this is issued by BlackRock (Singapore) Limited (Co. registration no. 200010143N). This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

No part of this material may be reproduced, stored in retrieval system or transmitted in any form or by any means, electronic, mechanical, recording or distributed without the prior written consent of BlackRock.

©2025 BlackRock, Inc. or its affiliates. All Rights Reserved. BLACKROCK is a registered trademark of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners.

MKTGH0125A/S-4135289

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Speakers

Hamish MacDonald, Head and CIO of APAC Real Estate, BlackRock

Alastair Nash, CEO, Wentworth Capital

[Teaser]

Hamish You can see thematically we're actually leaning into what is often called alternative sectors and, in some cases, called social infrastructure. Real asset investors leaning more and more into infrastructure assets, if we can find real estate that looks like infrastructure from a cash flow perspective, then we think that that's going to have a deep liquid exit.

[Partnerships in Action Intro]

Hamish Alastair, we've known each other for coming on 15 years now. We've worked together for nearly five years.

Hamish And we are very, very proud of the portfolio that we've built together with Urban Logistics Co. We had an absolute alignment of, of interests as partners going into that strategy. Onto our new thesis, and this is in life sciences where we have recently done a deal to establish a new operating platform called Area 53. I'm very proud to say with Wentworth Capital and we've bought two seed assets in Sydney. Can you tell us a little bit about the thesis? Why life sciences.

Alastair It is a sector that, as you mentioned has played out offshore. And there's a lot of growth in the Australian context. There is no focused, pure play life science real estate platform, but converse to that, there is a very vibrant and healthy life science sector. there's a number of universities that have huge requirements for lab space and office space, but not just the universities. It's corporates, government, venture capital, a whole ecosystem of tenants that that interact with each other So that really began the exploration phase of the strategy. And it felt like a very natural follow on to what we've been doing together in logistics.

Hamish Specifically, what types of investment opportunities are you looking at in the life sciences space in Australia?

Alastair The most active at the moment is targeting REITs that need to raise capital to fund development pipelines The second area where we're getting a lot of traction is with the universities themselves. They all have large life science programs and ambitions around life science, but don't necessarily have the capital to invest into the infrastructure to provide that.

Hamish As a private equity real estate investor, why do you choose BlackRock to partner with in those circumstances?

Alastair A number of reasons. Speed of execution has been everything. We definitely benefited from the first mover advantage in last mile logistics, and we are now benefiting from the first mover advantage in life science. Having a capital partner that has global perspectives has seen this play out in other markets. Therefore, has high conviction, can mobilize large pools of capital and move quickly, allows us to take advantage of these very compelling opportunities.

Alastair And following on from the trend around global insights, what else are you and the BlackRock platforms seeing globally that could be applicable to the Asian market?

Hamish We definitely see a continued path to finding sectors that have been well established and are successful in these Western markets and bringing them down into Australia or at least finding where those assets are in Australia and then aggregating those. We need to find sectors that have got good growth prospects at the same time. So we're really looking for sectors that A. Have strong supply and demand prospects; B. Are going to be deeply in demand by large scale global investors at our exit and; C. Are quite new or nascent in their journey in the Australian context. So we look at sectors like childcare centers, for example. We like sectors like self-storage if we can find a way to access it. And so you can see thematically we're actually leaning into what is often called alternative sectors and in some cases called social infrastructure.

Important information

This material is prepared by BlackRock and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of November 13, 2024, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. This material is intended for information purposes only and does not constitute investment advice or an offer or solicitation to purchase or sell in any securities, BlackRock funds or any investment strategy nor shall any securities be offered or sold to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Investment involves risks. Past performance is not an indication for the future performance.

In Australia, issued by BlackRock Investment Management (Australia) Limited ABN 13 006 165 975, AFSL 230 523 (BIMAL). This material provides general information only and does not take into account your individual objectives, financial situation, needs or circumstances. Before making any investment decision, you should assess whether the material is appropriate for you and obtain financial advice tailored to you having regard to your individual objectives, financial situation, needs and circumstances. Refer to BIMAL’s Financial Services Guide on its website for more information. This material is not a financial product recommendation or an offer or solicitation with respect to the purchase or sale of any financial product in any jurisdiction.

In Hong Kong, this material is issued by BlackRock Asset Management North Asia Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.

In Singapore, this is issued by BlackRock (Singapore) Limited (Co. registration no. 200010143N). This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

No part of this material may be reproduced, stored in retrieval system or transmitted in any form or by any means, electronic, mechanical, recording or distributed without the prior written consent of BlackRock.

©2025 BlackRock, Inc. or its affiliates. All Rights Reserved. BLACKROCK is a registered trademark of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners.

MKTGH0125A/S-4135289

Jason Horn

Head of Alternative Investment Strategy, Australasia

Jason Horn, Managing Director, is responsible for leading the marketing & distribution of BlackRock’s suite of Alternative Investment capabilities across Australia & New Zealand.

Jack Delaforce

Alternatives Specialist, Australasia

Jack Delaforce is an Alternatives Specialist for the Australasian region. In his role, Jack is responsible for the distribution and development of BlackRock's suite of Private Markets & Liquid Alternatives capabilities across Australia & NZ, working closely with our global investor base.

Michael Dennis

Head of Alternatives Strategy & Capital Markets, Asia Pacific

Michael Dennis, Managing Director, is Head of Alternatives Strategy & Capital Markets in Asia-Pacific. Mr. Dennis is responsible for leading BlackRock Alternative Investors' (BAI) strategy and leading BlackRock Capital Markets (BCM) in the region.

George Maltezos

Head of BlackRock Alternatives Specialist Team, Asia Pacific

George Maltezos, is Head of BlackRock Alternatives Specialist Team - Asia Pacific, and lead distribution of Alternatives throughout the region. His regional team are responsible for the marketing of BlackRock's suite of Alternative Investment products and capabilities across Asia Pacific, focusing on both Institutional and Wealth Investors.