BlackRock's new Asia-Pacific chief focusing on growth

BlackRock Inc.'s Asia-Pacific operations are poised to make a more significant contribution to the money management giant's overall business in coming years, the firm's new regional head says.

Ryan Stork, formerly the New York-based head of BlackRock's global Aladdin risk-management business, relocated to Hong Kong in August to replace Mark McCombe as the firm's head of Asia-Pacific. Mr. McCombe, in turn, moved to New York as global head of BlackRock's institutional client business.

Asked in an Oct. 15 interview how he would be judged in overseeing a $400 billion investment business that's accounted for 9% to 10% of BlackRock's revenue over the past three years, Mr. Stork said “over time, if we're not 15%-plus of the firm's revenues, I'll be really disappointed.”

Reaching that target is predicated on BlackRock's continued buildup of investment capabilities in the region, focused on areas such as the firm's multiasset-class business and alternatives, as well as the continued growth of its iShares exchange-traded funds franchise.

“I think you'll see us make further commitments with respect to expanding our investment capabilities, as well as our resources, around the region,” he said.

Gains in local manufacturing have underpinned “a very good year this year” for BlackRock's institutional and retail businesses alike, said Mr. Stork.

By way of example, he cited the three-year track record reached in 2014 by BlackRock's Asian fundamental equities team, headed by Andrew Swan, as “helping drive sales” in both the Asia-Pacific region and in Europe.

On Oct. 6, BlackRock announced it had hired Edward Bang, who had led UBS Global Asset Management's multiasset-class business in the region, as BlackRock's head of multiasset strategies, Asia-Pacific, to provide further momentum for what the firm considers a top business opportunity in the region, said Mr. Stork.

On the alternatives side, Mr. Stork said the firm's quantitative “scientific” equity teams are doing more in the long-short space, and its fundamental equity team is likely to follow suit. Credit is another area where BlackRock will be looking to expand its capabilities in the region.

Longer term, building an infrastructure investment capability in Asia is something “we're very interested in,” said Mr. Stork, noting that when he and BlackRock CEO Laurence D. Fink toured the region in late August to meet clients, “infrastructure came up in just about every conversation we had.”

BlackRock's $14 billion infrastructure business now remains focused on the U.S. and Europe, and the scale of investment needed to add Asia will require time, he said. For now, at least, the firm has no plans to acquire an infrastructure unit.

In an Oct. 14 presentation to reporters on the sidelines of a client conference in Hong Kong, Mr. Stork contended that investors based in the U.S. and Europe remain seriously underweight Asia. “A big part of my remit … will be educating our clients on the opportunities that exist here in the Asia-Pacific region,” he said.

Mr. Stork said both BlackRock's relatively mature institutional business and its nascent retail business in the region will need to see a pickup in growth to achieve his goal of exceeding 15% of the firm's total revenue.

Institutional investors account for more than three-quarters of BlackRock's Asia-Pacific assets under management, but a smaller piece of the firm's revenue in the region, said Mr. Stork.

Rising demand for alternative strategies, “particularly in Australia,” and demand for unconstrained fixed-income strategies from clients in Japan, have helped power the growth of BlackRock's institutional business this year, he said.

Meanwhile, there are growing opportunities to serve institutional client segments in the region such as insurance companies, which have accounted for “a large number of our new assignments” this year, said Mr. Stork.

And while the heavyweight sovereign wealth funds and retirement funds that dominate the institutional landscape in Asia continue to add internal investment capabilities, Mr. Stork noted that growing institutional usage of exchange-traded funds has given BlackRock the opportunity to talk to such investors on multiple levels — either to their external manager teams looking for inexpensive market exposures or to offer their internal teams “another tool in their investment arsenals.”

But growth, from a much lower base, in the firm's Asia-Pacific retail business — covering both high-net-worth investors as well as the man on the street — should prove even more important in achieving that higher contribution to BlackRock's revenue, he said.

Generational transfers of wealth in the region, from business builders to their children, should support that growth, as the focus of investments shifts from “hard assets,” such as real estate, to the broader financial strategies firms such as BlackRock offer, said Mr. Stork. During the past 18 months, “our private bank segment (is) up 25%,” he added.

Meanwhile, on the pure retail side, there are signs that a long-awaited shift of money from “savings” — in bank deposits that more often than not in recent years have found depositors failing to keep up with inflation — to investments is finally starting to take place, he said.