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When the 59-year old head of Softbank, Masayoshi Son, met with the 31-year old deputy crown prince of Saudi Arabia, Mohammed bin Salman (MbS) for 45 minutes in Tokyo, MbS committed $45 billion to Son’s Vision Fund. “Forty-five minutes, $45 billion,” Son said in September. “One billion dollars per minute.”
That caught the attention of the investment industry—where your value is measured by your next deal—the fear of missing out is a powerful emotion.
Perhaps motivated by the easy money being raised by funds like the Vision Fund, BlackRock has announced it is offering a $10 billion “Long Term Private Capital” fund.
It’s a drop in the bucket considering the company manages $6 trillion mostly in passive indexing type funds. But the appeal of easy money is hard to resist.
The fund will be overseen by Mark Wiseman. He has hired Andre Bourbonnais to help run the fund. Bourbonnais was the former chief executive of Canada’s Public-Sector Pension Investment Board where he and Wiseman worked together for nine years. Do you see where this is going?
I’ve written to you about my concerns with pensions many times, including here, here, and here.
It would be rich to assume teachers and firemen would be comfortable with their retirement money funding this type of arrangement.
Now then, why would BlackRock do this since their passive indexing approach is their bread and butter? Well, BlackRock’s CEO, Larry Fink, comes from the private equity world, and his firm was, at one point, part of the Blackstone Group. Maybe indexing is too boring. I can’t imagine someone like Vanguard founder Jack Bogle doing something like this when he was at the helm.
It’s worth asking, who is watching out for the average investor when it has been shown that the actual performance of the average investor is far less than the funds they’re investing in?
I want you to pay attention to the undercurrent in this story and ask: Who is watching out for you when the guys at the top are dealing?
Make sure you have a plan in place today to help you get through tough times. We might look back at “$45 billion in 45-minute” as the beginning of the end.
Click here to read Part I of Meet the Man Behind the Largest Private Investment Fund.