BlackRock didn’t come up with the concept of socially focused investing, but the $330 billion private market giant blazed a path last year by launching the first multi-alternatives strategy of its kind, eyeing direct investments in private equity, private credit, infrastructure, real estate and other niche asset classes.
The approach has paid off, as the BlackRock Impact Opportunities Fund already claims over $800 million in commitments, putting it within striking distance of its $1 billion target. And the fund is already making good on its promise of investing in businesses and projects owned, led by or serving people of color across the U.S., with a focus on Black, Latino and Native American communities.
“To create collective wealth for these communities and our clients, we combine our singular impact objective – to improve economic outcomes for undercapitalized communities of color – with a flexible, multi-alternative investment approach.”
Pam Chan
CIO and global head of BlackRock’s Alternative Solutions Group
The fund’s first investment in September 2021 was Tricolor, a fintech company with a majority-diverse employee base that uses its proprietary artificial intelligence-driven technology to sell and provide financing for high-quality yet affordable used vehicles to underserved Latinx customers.
In February, the fund partnered with Black-owned and operated real estate firm BRP Companies to invest in Arboretum, garden-style rental community that will bring 292 units to Farmingville, New York, a Long Island community facing a shortage of multifamily rental properties. BRP has hired several diverse-owned businesses as vendors on the project and selected as the preferred equity investor Basis Investment Group, a Black and female-owned commercial real estate investment firm.
And in May, the fund partnered with Eastwood Capital Partners, a Black-owned sponsor and Retro Fitness to invest in the development of up to 70 fitness franchises in the Dallas, Houston, and Southeast Florida areas to help address disparities in social determinants of health by making exercise, health and fitness more accessible to communities of color.
Demonstrating wide institutional demand for differentiated investment opportunities in undercapitalized communities, initial investors in the fund include Anthem, Costco Wholesale, Johnson Controls, Lincoln Financial Group, PayPal, State Farm and the W.K. Kellogg Foundation.
“The BlackRock Impact Opportunities Fund is poised to have a tremendous impact on the movement to advance racial equity in financial markets with its influence and mission to get much needed capital to communities of color,” said W.K. Kellogg Foundation Vice President and CIO Carlos Rangel. “We learned from the Business Case for Racial Equity that the U.S. stands to realize an increase in $2.7 trillion in GDP by closing the racial equity gap; that number could increase to $8 trillion by 2050.”
