BlackRock is in early discussions to acquire a minority stake in hedge fund powerhouse Millennium Management as it aims to expand into the lucrative world of alternative investments.
The world’s largest asset manager, BlackRock, has entered preliminary talks with Millennium Management, exploring a potential partnership that could result in a small equity stake in one of the hedge fund industry's most profitable players. This collaboration would mark a significant step for both companies, as BlackRock seeks to strengthen its presence in alternative investments, and Millennium founder Izzy Englander continues diversifying his business.
While details are still being negotiated and a deal isn’t guaranteed, if successful, it would be the first time Millennium has allowed external investment in its 35-year history. Millennium and BlackRock have not publicly commented on the matter.
Millennium’s History and Expansion
Founded by Englander in 1989 with just $35 million, Millennium has grown to manage $69.5 billion in assets with a team of 5,900 employees worldwide. Known for its rigorous risk controls and impressive track record, Millennium’s flagship fund has achieved around 10% returns in the first ten months of the year and averages 14% annually since its inception. The fund employs over 330 investment teams, making it a pioneering force in the multi-manager hedge fund model, alongside Citadel, a similarly structured hedge fund.
With an eye toward long-term growth and succession planning, Englander has been institutionalising Millennium, establishing a trustee advisory board and securing the capital base by locking in most investors into a five-year redemption share class. Last year, the firm adjusted its fee structure, introducing a minimum annual fee of 1% on assets or 20% of gains, regardless of performance, which enhances Millennium’s valuation stability.
Millennium has long considered forming strategic partnerships, with interest from private equity firms and sovereign wealth funds, but Englander has thus far maintained full ownership of the company. Talks last year to collaborate with Schonfeld Strategic Advisors were dropped when Schonfeld’s investors opted to increase their funding instead.
BlackRock’s Push into Alternative Investments
Led by CEO Larry Fink, BlackRock has prioritised alternative investments as a strategic growth area. Alternatives such as private credit and hedge funds typically offer higher fees compared to traditional funds, presenting a profitable opportunity for the $11.5 trillion asset manager. To bolster this arm, BlackRock has acquired stakes in several firms this year, including Global Infrastructure Partners and Preqin, an alternative investment data provider, and is also reportedly in talks with private credit firm HPS.
Currently, BlackRock manages $450 billion in alternative assets, of which $76 billion are hedge funds and other “liquid alternatives”. However, its reputation in the hedge fund space remains less prominent than firms like Millennium. By forming a partnership with Millennium, BlackRock could gain valuable insights and influence in the competitive hedge fund market.
A Strategic Partnership with Growth Potential
Millennium is also considering launching its first new fund in more than 30 years, potentially focused on less liquid assets, such as private credit, to diversify its portfolio and maintain its growth trajectory. This move aligns with BlackRock’s interest in expanding its alternatives portfolio, setting the stage for a mutually beneficial collaboration if the talks lead to an agreement.
The proposed partnership reflects BlackRock’s strategy of using flexible deal structures to secure growth. BlackRock’s expansion into alternatives has included joint ventures, minority stakes, and full acquisitions, creating a portfolio designed to withstand market fluctuations and position the firm as a leader in the high-growth alternatives sector.
While the specifics of the partnership are yet to be confirmed, the alliance could mark a turning point for both companies, reinforcing Millennium’s legacy and helping BlackRock secure a stronger foothold in the competitive hedge fund industry.
