BlackRock and Blackstone are two companies that may seem similar at first glance due to their shared history. But as we will discover, they have since diverged and are now vastly different companies. We will delve into their current activities, business models, and strategies to give you a better understanding of these two industry giants.
The main difference between BlackRock and Blackstone is that BlackRock is the world's largest asset manager, while Blackstone is the world's largest private equity firm.
What is BlackRock?
BlackRock is an American multinational company primarily known as the world's largest asset manager through its retail and institutional fund management services.
Headquartered in New York, BlackRock has over $10 trillion in assets under management at the time of writing.
BlackRock was founded in 1988 as "Blackstone Financial Management" by former employees of First Boston and Lehman Brothers, most notably Larry Fink, who is the CEO today.
What is Blackstone?
Blackstone is an American investment fund created in 1985 by two former Lehman Brothers employees, Peter G. Peterson and Stephen A. Schwarzman. Founded initially as an M&A firm in 1985, Blackstone has since expanded into other areas such as private equity, distressed business advisory, and real estate.
Blackstone has $881 billion in assets under management and is now the largest private equity firm in the world.
Differences between BlackRock and Blackstone
To understand the difference between BlackRock and Blackstone, we must go back 35 years.
BlackRock began in 1988 as Blackstone Financial Management, part of the Blackstone group, intending to provide institutional clients with asset management services. Stephen A. Schwarzman, Blackstone's CEO, gave Flink and his team a $5 million line of credit to get them started in exchange for a 50% stake in their company.
In 1992, Blackstone Financial Management became BlackRock, and by 1994, BlackRock had $53 billion in assets under management. That same year, Stephen A. Schwarzman and Larry Fink had an internal disagreement and agreed to part ways, and Stephen A. Schwarzman sold his share of BlackRock, a decision he would later call a "mistake." This is understandable when you see what BlackRock has become today.
Stephen A. Schwarzman remained with Blackstone and is still its CEO today, while Larry Fink became CEO of BlackRock.
The fact that the two companies have very similar names is no coincidence. The two CEOs, Larry Fink and Stephen A. Schwarzman, did this on purpose to confuse everyone.
Indeed, when Larry Fink decided to step away from Blackstone to pursue his own business, he needed a new name for his asset management company. According to Stephen A. Schwarzman, the discussion between them went something like this:
"Larry (Fink) and I were sitting down and he said, 'What do you think about keeping a family name with the word "black" in it?'"
Stephen A. Schwarzman replied that it was a good idea but that his advisors strongly advised against it because it would be confusing for everyone.
Larry Fink then apparently advised "either BlackPebble or BlackRock," saying, "You know, if we do that, all of our employees will kill us."
In the end, BlackRock was chosen, and today, both companies are the world's largest in their industry.
The wink doesn't stop there because today, BlackRock and Blackstone are literally based right next to each other in New York.
Without going into too much detail, the main difference between BlackRock and Blackstone's services is their accessibility.
Indeed, what allows BlackRock today to have so many funds under management is that anyone can invest through their products, whether individuals or institutions, primarily through their range of iShares ETFs.
On the other hand, Blackstone is a private equity fund, which means that not everyone can invest with them, thus reducing the number of potential clients. However, this does not prevent Blackstone from being a leader in its field because they are two completely different types of companies.
As for other activities, BlackRock is currently trying to position itself as a market leader in environmental, social, and corporate governance (ESG). Blackstone, on the other hand, has a strong presence in the real estate sector, having bought and partially sold large groups such as Hilton Worldwides or Center Parcs UK.
Comparison Table: BlackRock Vs Blackstone
|Main activity||Fund management||Private equity|
|Assets under management (AUM)||10 trillion USD||881 billion USD|
|Capitalization||113.35 billion USD||131.96 billion USD|
|Number of employees||18,400||3,165|
|Fortune 500 ranking||184||159|
|CEO||Larry Fink||Stephen A. Schwarzman|
Frequently Asked Questions
Who is more powerful between BlackRock and Blackstone?
This is a difficult question to answer, as it is difficult to equal BlackRock in the asset management business as much as it is complicated to rival Blackstone in the private equity business.
They are both leaders in their fields. However, BlackRock has more than ten times as many funds under management as Blackstone, thanks partly to their ETF lineup that allows them to own a large portion of every company in the world. This gives them immense power when it comes to exercising voting rights in these companies, which BlackRock does on behalf of their clients.
In addition, Blackstone has far fewer employees than BlackRock, making it a more exclusive and smaller company, partially due to their industry.
However, BlackRock does not beat Blackstone in terms of capitalization, which is a primary criteria for gauging the strength of a company.
Who is bigger, Blackstone or BlackRock?
Blackstone is larger than BlackRock in terms of capitalization (131.96 billion USD vs. 113.35 billion USD for BlackRock). However, BlackRock has significantly more assets under management (10 trillion USD vs. 881 billion USD for Blackstone).
Also, Blackstone is ranked 159 in the Fortune 500 index while BlackRock is 184th. Therefore, Blackstone is arguably a bigger company than BlackRock.
Are Blackstone and BlackRock related?
Yes, Blackstone and BlackRock are related by their history. BlackRock started in 1988 as "Blackstone Financial Management" and was part of the Blackstone Group.
However, they are now two completely different companies.
Are BlackRock and Blackstone the same?
No, BlackRock and Blackstone are not the same company. Yet confusion reigns because of the two CEOs, Larry Fink and Stephen A. Schwarzman, who voluntarily decided when the two entities were separated to rename them while keeping a common "last name".
In this article, we have seen that BlackRock and Blackstone are often confused because of their shared history and the sense of humor of Larry Flink and Stephen A. Schwarzman.
These two companies that started together are today undisputed leaders in their respective fields, fund management, and private equity.