BlackRock Buys Majority in Authentic Brands

BlackRock has paid $875 million for a majority stake in Authentic Brands, which owns, among others, Sports Illustrated and Juicy Couture.

CNN’s Clare Duffy had the news:

BlackRock made a big $875 million investment and became the largest shareholder of a company that owns Sports Illustrated, Nine West, Juicy Couture and dozens of other brands.

The deal, which was first reported Sunday by the Wall Street Journal, closed on Friday, a BlackRock (BLK) spokesperson confirmed to CNN Business.

The investment is the first for BlackRock’s new private-equity fund, Long Term Private Capital, which the company said in April was ready to start investing after securing $2.75 billion. That fund will account for $625 million of the total investment in Authentic Brands Group.

BlackRock is the world’s largest asset manager and some analysts think its new fund could change the landscape of private-equity investing. Most private-equity funds are expected to generate relatively short-term returns for investors through a buyout or public listing. But the Long Term Private Capital fund will provide “long-term private ownership” for “strong, stable companies,” the fund’s managing director André Bourbonnais said in a statement in April.

Reuters reported this was the first investment of BlackRock’s new Long Term Private Capital fund:

BlackRock Inc’s (BLK.N) new private equity fund Long Term Private Capital (LTPC) has completed its maiden investment, taking up an $875 million stake in Authentic Brands Group LLC, making it the largest investor in the U.S.-based entertainment company, the fund said on Sunday.

“The fund itself put $625 million and we have another $250 million that is coming from related entities and co-investors,” André Bourbonnais, head of BlackRock’s Long Term Private Capital, told Reuters.

The rise of BlackRock, the world’s largest asset manager, has been fueled by the explosive growth in exchange-traded funds and index funds as investors shift to cheaper funds that mimic stock and bond indexes. But as fund fees race to the bottom, BlackRock is looking at newer revenue sources.

CNBC’s Maggie Fitzgerald had the details on the size of the stake and some background on Authentic Brands:

BlackRock bought roughly a 30% stake in Authentic Brands Group for $875 million, the company’s chief executive officer Jamie Salter told CNBC’s Brian Sullivan in a phone interview on Sunday.

The deal values the brand management company around $4 billion to $4.5 billion, including debt, according to Salter. 

Created in 2010, Authentic Brands Group owns more than 50 athletic, entertainment, apparel and consumer brands, as well as the likeness of celebrities Muhammad Ali, Elvis Presley, Shaquille O’Neal, and Marilyn Monroe, according to the company’s website.

In addition to Sports Illustrated, Authentic Brands Group owns Aeropostale, Juicy Couture, Herve Leger, Nine West, Spyder, and Frye.

Salter and his family will still control about 20% of Authentic Brands Group; however, he sold to BlackRock to develop a “long-term partner” of “more than 10 years.”

Salter said the deal will provide Authentic Brands Group with additional capital to grow its branding business.