Asset management giant BlackRock announced it is taking a minority equity stake in European digital advice service Scalable Capital, the second investment the U.S. firm has made in the fast-growing robo-advisory marketplace.
Scalable, launched 16 months ago, has 250 million ($279 million) in assets from 6,000 retail investors. The start-ups platform provides multi-language and currency capabilities that can operate under different international tax codes and regulatory regimes. It gives BlackRock a bigger toe-hold in digital investment management, which corporate and other financial institutions increasingly want to offer their clients.
BlackRock plans to help the firm bring on corporate and institutional clients. Patrick Olson, chief operating officer of EMEA (Europe, the Middle East, and Africa) at BlackRock, will join Scalables board.
Scalable, which is based in London and Munich, has so far focused on clients in the U.K. and Germany, but is expanding into other areas of Europe. Scalable, as well as its product selection and asset allocation decisions, will remain independent and based in Europe. BlackRock led the 30 million funding round, alongside HV Holtzbrinck Ventures and Tengelmann Ventures, both of which have an existing investment in Scalable. The deal needs to be approved by regulators and is expected to close in the third quarter.
Robert Goldstein, chief operating officer of BlackRock and global head of BlackRock Solutions, says BlackRock chose to invest in Scalable specifically because the company wants to provide institutional-quality portfolio construction to a much larger audience than has traditionally had access to this type of rigorous advice.
BlackRock ultimately wants to allow clients to combine Scalables services with some of its more recent product offerings, including Aladdin Risk for Wealth Management; iRetire, which calculates retirement income; and iCapital, which helps simplify processing for alternative investments. Aladdin is BlackRocks central portfolio management system, and Aladdin Risk for Wealth Management provides advisors with portfolio construction, modeling and risk management technology.
Aladdin Risk for Wealth Management, iRetire and other products have grown out of BlackRocks efforts to make the analytics and portfolio-construction features of Aladdin available to retail clients through their financial advisors. Historically, only institutional investors have had access to BlackRocks analytics.
In 2015, BlackRock acquired digital advice service FutureAdvisor. It now makes the advice service available to retail investors through third parties, including RBC Wealth Management.