BlackRock opened its first office in Israel, tapping into the country's well of engineers and programmers to help improve the firm's global platform in a changing asset management industry.
"The technological expertise in Israel is widely celebrated, and this was an important factor in the decision to open an office," Alex Pollak, BlackRock's country head in Israel, said in an email. The world's largest asset manager hired seven employees, among them engineers.
BlackRock, known for its dominance in low-cost passive strategies, is making a push into technology with CEO Laurence D. Fink seeing computer models and data science as the future of active equity management. Recent investments by BlackRock in technology include a robo firm, an online marketplace that offers ultra-wealthy investors and their financial advisers alternative investments, a business that helps companies with their cash management processes and a smart window-glass company.
The opening of the office on Tel Aviv's trendy Rothschild Boulevard also gives BlackRock, which oversees $5.4 trillion in assets, the opportunity to tap Israeli institutions increasingly seeking to invest abroad. With pension funds and money managers sitting with more cash than the opportunities available on the Tel Aviv Stock Exchange, many are using exchange-traded funds and other pooled investments offered by companies like BlackRock to diversify their holdings.
"With an on-the-ground presence, we can more effectively serve Israeli clients looking for global solutions," Mr. Pollack said.
Israeli investments overseas have jumped some 60% since 2011 to 474 billion shekels ($135 billion) as of the first quarter this year, according to Bank of Israel data.
BlackRock hasn't decided yet how many more people it plans to hire in Israel, Mr. Pollack said.
"We will constantly strive to ensure we are adequately staffed to meet the evolving needs of our clients," Mr. Pollack said. "There is significant demand for BlackRock's global investment expertise, and our aim is to deepen the relationships with institutional investors."
Major banks and money managers have also flocked to Israel, given the recent blossoming of startups developing technologies for the industry. Barclays, Banco Santander and Citigroup have established mentorship programs for fintech ventures, while Visa and PayPal Holdings have research and development centers in Israel.
With more than 3,000 small technology companies, Israel has the largest number of startups per capita, according to the Economy Ministry. Fintech firms raised $725 million in 2016, Start-Up Nation Central, which tracks the industry, said in an email on Tuesday. That's a 49% increase on the previous year.