What BlackRock’s Big British Airways Deal Means for OCIO

On June 2, BlackRock announced that it had won a £21.5 billion ($30.5 billion) outsourced chief investment officer mandate from British Airways.  

Two things were curious about the deal — its size, and the fact that such a large pension fund chose to outsource its investments, rather than the other way around.

BlackRock’s Ryan Marshall confirmed that British Airways is now the firm’s largest client in the United Kingdom, and one of its largest globally.  

“I don’t know of anything larger or close to it in the OCIO business,” one industry expert told Institutional Investor.

While the sheer size of the deal is impressive, Marshall, BlackRock’s co-head of multi-asset strategies and solutions, said he expects to see more like it — and believes BlackRock is poised to meet those needs.  

“Covid has accelerated a lot of trends,” Marshall said. “This continuing trend toward multibillion-pound/dollar schemes is definitely one that’s in place. I would expect to continue to see it moving forward.” 

A British Airways team will be joining BlackRock solely to manage the pension scheme’s assets, he added.  

So why would a massive pension scheme decide to outsource in the first place?  

“This agreement is the necessary next step in the evolution of the schemes as they look to enhance their respective investment strategies, working toward their funding goals,” Roger Maynard, chair of trustees at the British Airways pension schemes, said in a statement.   

He added that BlackRock would “ensure the continued focus on delivering enhanced oversight, investment management, and long-term value” for the funds.

BlackRock’s Booming OCIO Business   

The mandate is the latest for BlackRock’s OCIO business: As of March 31, 2020, it had $250 billion under management, which excludes the British Airwaves deal and any other fresh mandates signed since then, according to…

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