Larry Fink, chief executive of BlackRock, truly enjoys the fast pace of Wall Street. Within a month of closing its record $19bn (€15bn) merger with Merrill Lynch Investment Managers, Fink's BlackRock clubbed together with property developer Tishman Speyer to buy a New York housing complex, Stuyvesant Town & Peter Cooper Village, for $5.4bn. BlackRock put its own money into the deal, investing alongside its clients.

However, BlackRock faces hundreds of angry New Yorkers who fear the fifth largest US fund manager will price them out of their rent-controlled homes. The complex, which was developed in the 1940s to house servicemen returning from World War II, spreads over 80 acres of prime New York real estate on the Lower East Side. Insurer MetLife owned the property for almost six decades. For Fink, the deals proves once more that scale matters. BlackRock gained $6bn in real estate equity assets when it took over State Street Research & Management in 2004. This has grown to $16bn, including $3bn it took on with the MLIM merger. The Stuyvesant Town & Peter Cooper Village acquisition will push BlackRock's real estate equity assets under management to more than $20bn. Bill Katz, analyst at Buckingham Research in New York, said the deal was attractive on five levels. It offered rising income in the out years; high performance fee potential; long-term gains should the venture sell its investment stake; it diversified BlackRock's earnings; and should lead to other deals and asset management mandates. Katz said that aside from the one-off transition fees, the venture should be neutral to earnings per share this year through to 2008. Proving that standing still is not one of his strong points, Fink took his firm into direct private equity investing for the first time this year when it started fundraising for a $500m US mid-market buyout fund. It closed its first private equity deal ahead of completing fundraising, paying $20m for Payments Processing, a technology company. The MLIM merger also adds $3bn in private equity fund of funds assets.The business harks back to BlackRock's roots as a start-up bond manager under the roof of US private equity firm Blackstone in the late 1980s. PNC Financial Services bought Blackstone out in 1995 and four years later it listed on the New York Stock Exchange. BlackRock has been hit by $91m in integration costs so far this year, but the business continues to grow. Last week it reported a $23.5bn pipeline of mandates. A third of the pipeline is in alternative investments, including real estate and collateralised debt obligations, which have higher fees than BlackRock's traditional bonds business. Fink is targeting an organic growth rate of 6% to 8% for next year. A further diversifier for Fink has been BlackRock Solutions, which provides investment and risk management systems. BlackRock has won its first government-backed institutional client which will use the fund manager's Aladdin system of trading and risk-management technologies. "This is a transformational piece of business and it represents a new level for our Aladdin systems. With this win we will have opportunities with other government official institutions," said Fink, who confirms a second contract in the pipeline. The fees earned from these contracts are based on assets under management, which means as these institutions grow, so does BlackRock. "Generally we grow with our clients in terms of fees, so if our current account deficits continue to grow and our government official institutions grow in assets, we'll be a beneficiary of that too," he said. Fink said he had been talking to third parties about acquisitions to grow BlackRock Solutions business. From BlackRock's midtown New York offices, Ralph Schlosstein, Fink's long-standing business partner and president of the firm, smiles nervously when asked whether Fink would do another mega-merger. Schlosstein is allowed to be nervous, he has spent the past eight months piecing together the integration. The strength of BlackRock's operating systems, which it also sells to other asset managers, has been crucial to the swift merger. Within six months of the deal being announced in February, MLIM bond portfolio managers were able to look at their trades and risk data on the same system as their BlackRock colleagues. MLIM's US equity managers will be on BlackRock systems by early next year, the firm said last week. Fink has been careful to make sure employees know where they stand from the start, a lesson learnt from his previous large-scale acquisitions. By June, BlackRock had named its front-line managers. Investors have grand ambitions for BlackRock. Its stock is up 40% this year and trades at a 20% premium to the asset management sector. Analysts favour the deal more than Legg Mason's acquisition of Citigroup Asset Management, which is more complex and less focused on growth opportunities. Retail fund performance is also stronger at BlackRock; 47% of funds are rated 4-5 stars by Morningstar compared with 25% at Legg Mason. Poor equity fund performance has hit Legg Mason over the past three years. Katz said: "Given MLIM owns just under 50% of the new entity, we believe there is greater motivation for the deal to work versus Citigroup selling 100% of Citigroup Asset Management to Legg Mason." Citigroup took 19 million Legg Mason shares as part payment for its asset management business last year, but it sold down that stake after the March vesting period expired and when the stock was trading above $100. It has since slipped to $86. Merrill Lynch Investment Managers is an excellent fit for BlackRock. Fink had looked at deals with Morgan Stanley Investment Management, and many years ago at Barclays Global Investors, before settling on MLIM, seen as a business on the mend. Bob Doll, chief investment officer at MLIM, wanted to grow the third-party retail distribution business and he set up a new operation under the name of Princeton Portfolio Research & Management. The brand survived little more than two weeks until Fink moved in with his offer. All US retail business is now branded BlackRock, which as a pure play asset manager, does not suffer from the conflicts of interest of running both a manufacturing and distribution capability. Doll was named vice-chairman and chief investment officer of global equities at BlackRock. The Merrill Lynch deal catapults BlackRock into global fund manager territory, with one third of employees based outside the US. Fink believes that could grow to 50% in the next five years as the business expands, particularly in Asia. BlackRock recently hired a yen bond manager and it is in talks with an Asian equity manager in Hong Kong. The MLIM merger, although off to a good start, has much to prove. Fink will need to show he can generate the top-line growth to appease sceptical investors who believe the stock is overvalued and fear the Legg Mason example could be repeated at BlackRock. The diversification that has built into the business, by client and asset type, bodes well for it being able to overcome difficult trading conditions. As Bill Katz at Buckingham wrote last week: "BlackRock is the cat that got the canary, not Legg Mason."