BlackRock, the big money manager, has acquired R3 Capital Management, the firm announced in an internal memorandum obtained by DealBook. (Read it after the jump.)
R3, founded and run by the former Lehman Brothers executive Rick Rieder, has about $1.5 billion in assets under management. Mr. Rieder, who was formerly Lehman’s head of global principal strategies and credit businesses, will become a BlackRock managing director and will lead its fixed income alternatives portfolio.
BlackRock also hired Akiva Dickstein from Merrill Lynch to head its mortgage portfolio team and Randy Robertson from Wachovia to co-head its securitized assets investment team.
Last summer, Lehman sold to R3 about $5 billion of assets and invested in the hedge fund. In October, the securities firm agreed to sell its stake in R3 as part of its bankruptcy case.
Below is the internal memo from BlackRock:
A message from Rob Kapito, Scott Amero and Peter Fisher
Today, we are communicating some very exciting news to our clients and we would like to share the same with you. We are pleased to announce that we are substantially expanding our fixed income portfolio management team to maximize our ability to take advantage of significant investment opportunities for our clients.
BlackRock has entered into an agreement with R3 Capital Management LLC. to assume management responsibility for R3’s multi-strategy credit hedge fund with $1.5 billion in assets under management. Rick Rieder, President and CEO of R3 Capital Partners, is joining BlackRock as Managing Director and Head of our Fixed Income Alternatives Portfolio Team and will continue to manage the R3 funds at BlackRock. Rick was formerly Head of Lehman Brothers’ Global Principal Strategies and Credit Businesses and has over 22 years of industry experience.
Rick brings with him a team of seasoned professionals from R3 with expertise in portfolio management, trading, analysis, and research. The senior team members who will be joining BlackRock as Managing Directors are J. Richard (Dik) Blewitt, Russell Brownback, Leland Hart, Michael Lipsky, Mike Phelps, John Stein, Josh Tarnow, Paul Tice, and Michael Weaver.
This development enhances our credit, leveraged finance, and distressed capabilities by augmenting our global credit investment and research efforts and adding aviation/aerospace finance expertise to our investment platform, thus adding value for our clients and our shareholders.
Further, we are pleased to announce two additional investment professionals joining BlackRock. Akiva Dickstein has joined as a Managing Director to head our Mortgage Portfolio Team. Akiva has over 16 years of mortgage experience. Prior to joining BlackRock, Akiva spent eight years at Merrill Lynch, where he served as Managing Director and Head of the U.S. Rates & Structured Credit Research Group. Akiva’s strong analytical background serves him well as Lead Portfolio Manager.
With over 25 years of experience with structured products, Randy Robertson has also joined as a Managing Director to co-head the Securitized Assets Investment Team. Randy spent 11 years with Wachovia Capital Markets, most recently as a Managing Director, head of the Residential Mortgage and Consumer Group, and co-head of Residential CDOs.
As we add to our investment resources, we are building on our existing team approach, global platform, and leadership team. Scott Amero, Global CIO, Fixed Income, and Peter Fisher continue to co-head the Fixed Income Portfolio Management Group, and Andy Phillips continues as Global COO. We are augmenting our investment process to better absorb and utilize our new resources and to respond to the changing market environment. Each Portfolio Team is independently accountable for asset allocation and portfolio construction, and each Investment Team is responsible for research, analysis, execution, and security selection.
The current market environment has created significant investment opportunities in fixed income. Mortgages and structured assets originally rated AAA now trade at distressed prices. Leveraged finance and distressed assets continue to experience downgrades and defaults as the severe recession takes its toll. One key challenge to successfully investing in the most attractive opportunities within these sectors is that they are often the most resource-intensive to identify and evaluate. They require extensive credit research, structuring/modeling work, and the ability to negotiate directly with borrowers.
The addition of Rick and the R3 Capital investment professionals, as well as Akiva and Randy, to our already strong credit and mortgage teams will help us capitalize on these investment opportunities on behalf of our clients and, in so doing, build value for our shareholders. Please join us in welcoming Rick and his colleagues, Akiva and Randy to BlackRock.
–Michael J. de la Merced
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