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Blackrock the world’s largest asset manager has recently announced that it will be launching a new investment platform in Saudi Arabia with an anchor investment of five billion dollars [$5,000,000,000] coming from the kingdoms own sovereign wealth fund.
BlackRock has been a long-time champion of investments based off Environmental, Social and Governance criteria which obviously vibes well with the authoritarian Petro-state.
The companies CEO Larry Fink said in an interview that the Kingdom “has become an increasingly attractive destination for international investments” but that’s not really true…
So what is Blackrock ACTUALLY doing in Saudi Arabia?
Blackrock is best known for creating mutual and exchange traded funds for individuals and other institutions to invest in.
Their biggest exchange traded funds are mostly passive indexes that makes buying a broad portfolio easier for regular investors. They take a small fee for managing these index funds but because those funds are so popular even a small fee generates a LOT of revenue.
The trillions of dollars in assets they manage through these investment vehicles has drawn a lot of criticism from people claiming that they secretly control the world… normally the help of some laser eyes…
Now while they do manage trillions of dollars in assets, it’s not THEIR assets and there are strict mandates outlining what they can and can’t do with the funds that they manage on behalf of the millions of investor they work for, but that doesn't mean that the company doesn’t deserve a healthy amount of criticism.
If anything, the narrative that they secretly own all of the worlds biggest companies distracts from the actual shady stuff that they and other large investment firms do.
The company also has operations providing advice, technology and investment infrastructure to banks, pension funds and even entire governments which is what it is doing in Saudi Arabia.
Blackrock first set up an office in the Kingdom back in 2019 with the initial intention of providing financial services to “sophisticated investors” according to the companies own website.
The remote branch of the Blackrock global operation hasn’t really done much until the announcement earlier this year that it would be partnering up with the Public Investment Fund to launch an investment platform with the stated goal of making it easier for international investors to invest into Saudi Arabia as well as other countries in the Middle East and North Africa.
The pitch is that these markets are growing and there aren’t as many investors operating in the region so there are potentially outsized returns to be made while markets in the west are overvalued.
Big investors already know this… but there is a very good reason why they don’t invest in places like the middle east… and that’s because they are INCREDIBLY risky, and outside of oil… and constructing dumb buildings FUNDED by oil, there really isn’t that much to invest in.
A well-known American company like Blackrock could ease these concerns with big investors and act as a middle man between them and the projects actually getting their money, which is really, when you think about it, ALL that their company does.
