UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-23584
Name of Fund: | BlackRock Private Investments Fund |
Fund Address: | 100 Bellevue Parkway, Wilmington, DE 19809 |
Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Private Investments Fund, 55 East 52nd Street, New York, NY 10055
Registrant’s telephone number, including area code: (800) 882-0052, Option 4
Date of fiscal year end: 3/31/2021
Date of reporting period: 3/31/2021
Item 1 – Report to Stockholders
(a) The Report to Shareholders is attached herewith.
MARCH 31, 2021 |
2021 Annual Report |
BlackRock Private Investments Fund
Not FDIC Insured • May Lose Value • No Bank Guarantee |
Dear Shareholder,
The 12-month reporting period as of March 31, 2021 reflected a remarkable period of disruption and adaptation, as the global economy dealt with the implications of the coronavirus (or “COVID-19”) pandemic. As the period began, the response to the virus’s spread was well underway, and countries around the world instituted economically disruptive countermeasures. Stay-at-home orders and closures of non-essential businesses became widespread, many workers were laid off, and unemployment claims spiked, causing a global recession and a sharp fall in equity prices.
As April 2020 began, stocks were near their lowest point since the beginning of the pandemic. However, a steady recovery began, as businesses started re-opening and governments learned to adapt to life with the virus. Equity prices continued to rise throughout the summer, fed by strong fiscal and monetary support and improving economic indicators. Many equity indices neared or surpassed all-time highs late in the reporting period following the implementation of mass vaccination campaigns and passage of an additional $1.9 trillion of fiscal stimulus. In the United States, both large- and small-capitalization stocks posted a significant advance. International equities also gained, as both developed countries and emerging markets rebounded substantially.
The 10-year U.S. Treasury yield (which is inversely related to bond prices) was near all-time lows as the period began, reflecting a reduced investor appetite for risk. However, inflation concerns from a rapidly expanding economy raised yields late in the reporting period, leading to a negative overall return for most U.S. Treasuries. In the corporate bond market, support from the U.S. Federal Reserve (the “Fed”) assuaged credit concerns and led to positive returns for corporate bonds, particularly high-yield corporates, which gained substantially.
The Fed remained committed to accommodative monetary policy by maintaining near zero interest rates and by announcing that inflation could exceed its 2% target for a sustained period without triggering a rate increase. To stabilize credit markets, the Fed also continued purchasing significant quantities of bonds, as did other influential central banks around the world, including the European Central Bank and the Bank of Japan.
Looking ahead, while coronavirus-related disruptions have clearly hindered worldwide economic growth, we believe that the global expansion will continue to accelerate as vaccination efforts ramp up and pent-up consumer demand leads to higher spending. In early 2021, President Biden signed one of the largest economic rescue packages in U.S. history, which should provide a solid tailwind for economic growth. In our view, inflation is likely to increase somewhat as the expansion continues, but moderate inflation is less likely to be followed by interest rate hikes that could threaten the economic expansion due to the change in Fed policy.
Overall, we favor a positive stance toward risk, with an overweight in equities. We see U.S. and Asian equities outside of Japan benefiting from structural growth trends in technology, while emerging markets should be particularly helped by a vaccine-led economic expansion. While we are neutral overall on credit, rising inflation should provide tailwinds for inflation-protected bonds, and global high-yield and Asian bonds also present attractive opportunities. We believe that international diversification and a focus on sustainability can help provide portfolio resilience, and the disruption created by the coronavirus appears to be accelerating the shift toward sustainable investments.
In this environment, our view is that investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.
Sincerely,
Rob Kapito
President, BlackRock Advisors, LLC
Rob Kapito
President, BlackRock Advisors, LLC
Total Returns as of March 31, 2021 | ||||
6-Month | 12-Month | |||
U.S. large cap equities (S&P 500® Index) | 19.07% | 56.35% | ||
U.S. small cap equities (Russell 2000® Index) | 48.05 | 94.85 | ||
International equities (MSCI Europe, Australasia, Far East Index) | 20.08 | 44.57 | ||
Emerging market equities (MSCI Emerging Markets Index) | 22.43 | 58.39 | ||
3-month Treasury bills (ICE BofA 3-Month U.S. Treasury Bill Index) | 0.06 | 0.12 | ||
U.S. Treasury securities (ICE BofA 10-Year U.S. Treasury Index) | (8.88) | (8.23) | ||
U.S. investment grade bonds (Bloomberg Barclays U.S. Aggregate Bond Index) | (2.73) | 0.71 | ||
Tax-exempt municipal bonds (S&P Municipal Bond Index) | 1.46 | 5.29 | ||
U.S. high yield bonds (Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index) | 7.35 | 23.65 | ||
Past performance is not an indication of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index. |
2 | THIS PAGEISNOT PARTOF YOUR FUND REPORT |
Table of Contents
Page | ||||
2 | ||||
Annual Report: | ||||
4 | ||||
4 | ||||
5 | ||||
7 | ||||
Disclosure of Expenses for Continuously Offered Closed-End Funds | 7 | |||
Financial Statements: | ||||
8 | ||||
13 | ||||
14 | ||||
15 | ||||
16 | ||||
18 | ||||
25 | ||||
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement | 26 | |||
29 | ||||
30 | ||||
32 | ||||
34 |
3 |
The Benefits and Risks of Leveraging | BlackRock Private Investments Fund |
The Fund may utilize leverage to seek to enhance the distribution rate on, and net asset value (“NAV”) of, its common shares (“Common Shares”). However, there is no guarantee that these objectives can be achieved in all interest rate environments. The Fund does not intend to borrow money or utilize leverage during its first year of operations.
In general, the concept of leveraging is based on the premise that the financing cost of leverage, which is based on short-term interest rates, is normally lower than the income earned by the Fund on its longer-term portfolio investments purchased with the proceeds from leverage. To the extent that the total assets of the Fund (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the Fund’s shareholders benefit from the incremental net income. The interest earned on securities purchased with the proceeds from leverage (after paying the leverage costs) is paid to shareholders in the form of dividends, and the value of these portfolio holdings (less the leverage liability) is reflected in the per share NAV.
To illustrate these concepts, assume the Fund’s capitalization is $100 million and it utilizes leverage for an additional $30 million, creating a total value of $130 million available for investment in longer-term income securities. If prevailing short-term interest rates are 3% and longer-term interest rates are 6%, the yield curve has a strongly positive slope. In this case, the Fund’s financing costs on the $30 million of proceeds obtained from leverage are based on the lower short-term interest rates. At the same time, the securities purchased by the Fund with the proceeds from leverage earn income based on longer-term interest rates. In this case, the Fund’s financing cost of leverage is significantly lower than the income earned on the Fund’s longer-term investments acquired from such leverage proceeds, and therefore the holders of Common Shares (“Common Shareholders”) are the beneficiaries of the incremental net income.
However, in order to benefit shareholders, the return on assets purchased with leverage proceeds must exceed the ongoing costs associated with the leverage. If interest and other costs of leverage exceed the Fund’s return on assets purchased with leverage proceeds, income to shareholders is lower than if the Fund had not used leverage. Furthermore, the value of the Fund’s portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of portfolio investments. In contrast, the amount of the Fund’s obligations under its leverage arrangement generally does not fluctuate in relation to interest rates. As a result, changes in interest rates can influence the Fund’s NAVs positively or negatively. Changes in the future direction of interest rates are very difficult to predict accurately, and there is no assurance that the Fund’s intended leveraging strategy will be successful.
The use of leverage also generally causes greater changes in the Fund’s NAV, market price and dividend rates than comparable portfolios without leverage. In a declining market, leverage is likely to cause a greater decline in the NAV and market price of the Fund’s shares than if the Fund were not leveraged. In addition, the Fund may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of leverage instruments, which may cause the Fund to incur losses. The use of leverage may limit the Fund’s ability to invest in certain types of securities or use certain types of hedging strategies. The Fund incurs expenses in connection with the use of leverage, all of which are borne by shareholders and may reduce income to the shareholders. Moreover, to the extent the calculation of the Fund’s investment advisory fees includes assets purchased with the proceeds of leverage, the investment advisory fees payable to the Fund’s investment adviser will be higher than if the Fund did not use leverage.
The Fund may utilize leverage through a credit facility or reverse repurchase agreements as described in the Notes to Financial Statements, if applicable.
Under the Investment Company Act of 1940, as amended (the “1940 Act”), the Fund is permitted to issue debt up to 33 1/3% of its total managed assets. The Fund may voluntarily elect to limit its leverage to less than the maximum amount permitted under the 1940 Act.
If the Fund segregates or designates on its books and records cash or liquid assets having a value not less than the value of the Fund’s obligations under a reverse repurchase agreement (including accrued interest) then such transaction is not considered a senior security and is not subject to the foregoing limitations and requirements imposed by the 1940 Act.
Derivative Financial Instruments
The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other assets without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.
4 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Fund Summary as of March 31, 2021 | BlackRock Private Investments Fund |
Investment Objective
BlackRock Private Investments Fund’s (the “Fund”) investment objective is to seek long-term capital appreciation and to provide attractive risk-adjusted returns primarily through an actively-managed portfolio that provides eligible investors with targeted exposure to private equity investments. The Fund’s investment objective is a non-fundamental policy of the Fund and may be changed by the Board of Trustees of the Fund (the “Board”) without prior shareholder approval.
The Fund’s common shares are not listed on any securities exchange. The Fund is designed for long-term investors, and an investment in the common shares, unlike an investment in a traditional listed closed-end fund, should be considered illiquid.
No assurance can be given that the Fund’s investment objective will be achieved.
Net Asset Value Per Share Summary
03/31/21 | 03/01/21(a) | Change | High | Low | ||||||||||||||||
Net Asset Value — Institutional | $ | 9.94 | $ | 10.00 | (0.60 | )% | $ | 10.00 | $ | 9.94 | ||||||||||
Net Asset Value — Class D | 9.94 | 10.00 | (0.60 | ) | 10.00 | 9.94 |
(a) | Commencement of operations. |
FUND SUMMARY | 5 |
Fund Summary as of March 31, 2021 (continued) | BlackRock Private Investments Fund |
Overview of the Fund’s Total Investments
PORTFOLIO ALLOCATION
Asset Type(a) | 03/31/21 | |||
Floating Rate Loan Interests | 47 | % | ||
Corporate Bonds | 34 | |||
Asset-Backed Securities | 12 | |||
Private Equity Investments. | 7 |
INDUSTRY ALLOCATION
Industry(a)(b) | 03/31/21 | |||
Media | 17 | % | ||
Asset-Backed Securities | 12 | |||
Hotels, Restaurants & Leisure | 6 | |||
Pharmaceuticals | 6 | |||
Software | 5 | |||
Health Care Providers & Services | 4 | |||
Wireless Telecommunication Services | 3 | |||
Semiconductors & Semiconductor Equipment | 3 | |||
Diversified Telecommunication Services | 3 | |||
Equity Real Estate Investment Trusts (REITs) | 3 | |||
Interactive Media & Services | 3 | |||
Commercial Services & Supplies | 3 | |||
IT Services | 2 | |||
Food Products | 2 | |||
Environmental, Maintenance, & Security Service | 2 | |||
Machinery | 2 | |||
Building Materials | 2 | |||
Health Care Technology | 2 | |||
Oil, Gas & Consumable Fuels | 2 | |||
Chemicals | 2 | |||
Electronic Equipment, Instruments & Components | 1 | |||
Health Care Equipment & Supplies | 1 | |||
Life Sciences Tools & Services | 1 | |||
Specialty Retail | 1 | |||
Independent Power and Renewable Electricity Producers | 1 | |||
Household Durables | 1 | |||
Automobiles | 1 | |||
Technology Hardware, Storage & Peripherals | 1 | |||
Metals & Mining | 1 | |||
Energy Equipment & Services | 1 | |||
Household Products | 1 | |||
Air Freight & Logistics | 1 | |||
Textiles, Apparel & Luxury Goods | 1 | |||
Containers & Packaging | 1 | |||
Building Products | 1 | |||
Trading Companies & Distributors | 1 | |||
Other* | — | (c) |
(a) | Excludes short-term securities. |
(b) | For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease. |
(c) | Rounds to less than 1% of total investments. |
* | Includes one or more investment categories that individually represents less than 1% of the Fund’s total investments. Please refer to the Schedule of Investments for details. |
6 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
About Fund Performance | BlackRock Private Investments Fund |
Institutional Shares are not subject to any sales charge. These shares bear no ongoing distribution or service fees and are available only to certain eligible investors.
Class D Shares are not subject to any sales charge. These shares are subject to a distribution and servicing fee of 0.25% per year.
Past performance is not an indication of future results. Financial markets have experienced extreme volatility and trading in many instruments has been disrupted. These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the fund’s investments. As a result, current performance may be lower or higher than the performance data quoted. Refer to blackrock.com to obtain performance data current to the most recent month-end. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Distributions paid to each class of shares will vary because of the different levels of service, distribution and transfer agency fees applicable to each class, which are deducted from the income available to be paid to shareholders.
BlackRock Advisors, LLC (the “Manager”), the Fund’s investment adviser, has contractually and/or voluntarily agreed to waive and/or reimburse a portion of the Fund’s expenses. Without such waivers and/or reimbursements, the Fund’s performance would have been lower. With respect to the Fund’s voluntary waiver(s), if any, the Manager is under no obligation to waive and/or reimburse or to continue waiving and/or reimbursing its fees and such voluntary waiver(s) may be reduced or discontinued at any time. With respect to the Fund’s contractual waiver(s), if any, the Manager is under no obligation to continue waiving and/or reimbursing its fees after the applicable termination date of such agreement. See the Notes to Financial Statements for additional information on waivers and/or reimbursements.
Disclosure of Expenses for Continuously Offered Closed-End Funds
Shareholders of the Fund may incur the following charges: (a) transactional expenses, including early withdrawal fees; and (b) operating expenses, including investment advisory fees, and other fund expenses. The example below (which is based on a hypothetical investment of $1,000 invested on March 1, 2021 (commencement of operations) and held through March 31, 2021) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other funds.
The expense example provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their Fund and share class under the heading entitled “Expenses Paid During the Period.”
The expense example also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in the Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.
The expenses shown in the expense example are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as early withdrawal fees. Therefore, the hypothetical example is useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.
Expense Example for Continuously Offered Closed-End Funds
Actual | Hypothetical(a) | |||||||||||||||||||||||||||||||
Beginning Account Value (03/01/21)(b) | Ending Account Value (03/31/21) | Expenses Paid During the Period(c) | Beginning Account Value (03/01/21)(b) | Ending Account Value (03/31/21) | Expenses Paid During the Period(c) | Annualized Expense Ratio | ||||||||||||||||||||||||||
Institutional | $ | 1,000.00 | $ | 994.00 | $ | 3.00 | $ | 1,000.00 | $ | 1,001.24 | $ | 3.01 | 3.54 | % | ||||||||||||||||||
Class D | 1,000.00 | 994.00 | 3.21 | 1,000.00 | 1,001.03 | 3.22 | 3.79 |
(a) | Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365. |
(b) | Commencement of operations. |
(c) | For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 31/365 (to reflect the period since inception date of March 1, 2021 to March 31, 2021). |
See “Disclosure of Expenses for Continuously Offered Closed-End Funds” for further information on how expenses were calculated.
ABOUT FUND PERFORMANCE / DISCLOSUREOF EXPENSESFOR CONTINUOUSLY OFFERED CLOSED-END FUNDS | 7 |
March 31, 2021 | BlackRock Private Investments Fund (Percentages shown are based on Net Assets) |
Security | Shares | Value | ||||||
Private Equity Investments |
| |||||||
Direct Investments — 6.0% |
| |||||||
Media — 6.0% | ||||||||
RB Rouge Co-Invest B, LP (Acquired 03/30/21, Cost: $3,000,000)(a)(b) | — | (c) | $ | 3,000,000 | ||||
|
| |||||||
Total Private Equity Investments — 6.0% (Cost: $3,000,000) | 3,000,000 | |||||||
|
| |||||||
Par (000) | ||||||||
Asset-Backed Securities | ||||||||
Battalion CLO XIX Ltd., Series 2021-19A, Class B, (3 mo. LIBOR US + 1.60%), 1.79%, 04/15/34(d)(e)(f) | $ | 1,000 | 1,000,000 | |||||
Dryden 58 CLO Ltd., Series 2018-58A, Class B, (3 mo. LIBOR US + 1.50%), 1.72%, 07/17/31(d)(e) | 750 | 749,476 | ||||||
Galaxy XXVII CLO Ltd., Series 2018-27A, Class C, (3 mo. LIBOR US + 1.80%), 1.99%, 05/16/31(d)(e) | 700 | 700,473 | ||||||
Palmer Square CLO Ltd.(d)(e) | ||||||||
Series 2018-1A, Class A2, (3 mo. LIBOR US + 1.45%), 1.67%, 04/18/31 | 1,000 | 1,000,727 | ||||||
Series 2018-1A, Class B, (3 mo. LIBOR US + 1.75%), 1.97%, 04/18/31 | 750 | 748,749 | ||||||
Signal Peak CLO 8 Ltd., Series 2018-8A, Class C, (3 mo. LIBOR US + 2.00%), 2.22%, 04/20/33(d)(e) | 750 | 749,306 | ||||||
|
| |||||||
Total Asset-Backed Securities — 10.0% (Cost: $4,941,805) | 4,948,731 | |||||||
|
| |||||||
Corporate Bonds | ||||||||
Automobiles — 0.6% | ||||||||
Ford Motor Credit Co. LLC, 4.14%, 02/15/23 | 290 | 299,686 | ||||||
|
| |||||||
Building Materials(e) — 1.5% | ||||||||
Builders FirstSource, Inc., 6.75%, 06/01/27 | 275 | 295,969 | ||||||
Jeld-Wen, Inc., 6.25%, 05/15/25 | 413 | 438,812 | ||||||
|
| |||||||
734,781 | ||||||||
Commercial Services & Supplies — 0.3% | ||||||||
ADT Security Corp., 4.13%, 06/15/23 | 143 | 148,541 | ||||||
|
| |||||||
Containers & Packaging — 0.4% | ||||||||
Sealed Air Corp., 5.13%, 12/01/24(e) | 176 | 190,520 | ||||||
|
| |||||||
Diversified Telecommunication Services — 0.9% | ||||||||
Lumen Technologies, Inc., Series W, 6.75%, 12/01/23 | 399 | 440,440 | ||||||
|
| |||||||
Electronic Equipment, Instruments & Components — 0.9% | ||||||||
CDW LLC/CDW Finance Corp., 4.13%, 05/01/25 | 430 | 447,200 | ||||||
|
| |||||||
Environmental, Maintenance, & Security Service(e) — 1.5% | ||||||||
Clean Harbors, Inc., 4.88%, 07/15/27 | 285 | 300,675 | ||||||
GFL Environmental, Inc., 5.13%, 12/15/26 | 421 | 443,629 | ||||||
|
| |||||||
744,304 | ||||||||
Equity Real Estate Investment Trusts (REITs) — 1.7% | ||||||||
MGM Growth Properties Operating Partnership LP/MGP Finance Co-Issuer, Inc., 5.63%, 05/01/24 | 410 | 440,081 | ||||||
MPT Operating Partnership LP/MPT Finance Corp., 5.00%, 10/15/27 | 417 | 438,686 | ||||||
|
| |||||||
878,767 |
Security | Par (000) | Value | ||||||
Food Products — 0.3% | ||||||||
JBS USA LUX SA/JBS USA Finance, Inc., 6.75%, 02/15/28(e) | $ | 137 | $ | 149,673 | ||||
|
| |||||||
Health Care Providers & Services — 3.0% | ||||||||
Centene Corp., 4.25%, 12/15/27 | 429 | 451,255 | ||||||
HCA, Inc., 5.38%, 02/01/25 | 400 | 446,206 | ||||||
Teleflex, Inc., 4.63%, 11/15/27 | 422 | 446,792 | ||||||
Tenet Healthcare Corp., 4.63%, 09/01/24(e) | 146 | 150,198 | ||||||
|
| |||||||
1,494,451 | ||||||||
Health Care Technology — 0.9% | ||||||||
IQVIA, Inc., 5.00%, 05/15/27(e) | 424 | 447,657 | ||||||
|
| |||||||
Hotels, Restaurants & Leisure(e) — 2.1% | ||||||||
1011778 BC ULC/New Red Finance, Inc., 5.75%, 04/15/25 | 414 | 439,875 | ||||||
Hilton Domestic Operating Co., Inc., 5.38%, 05/01/25 | 421 | 443,734 | ||||||
Yum! Brands, Inc., 7.75%, 04/01/25 | 133 | 145,469 | ||||||
|
| |||||||
1,029,078 | ||||||||
Independent Power and Renewable Electricity Producers — 0.8% | ||||||||
Clearway Energy Operating LLC, 4.75%, 03/15/28(e) | 413 | 429,681 | ||||||
|
| |||||||
Interactive Media & Services — 0.9% | ||||||||
Netflix, Inc., 5.88%, 02/15/25 | 385 | 441,306 | ||||||
|
| |||||||
Internet Software & Services — 0.3% | ||||||||
Go Daddy Operating Co. LLC/GD Finance Co., Inc., 5.25%, 12/01/27(e) | 141 | 149,108 | ||||||
|
| |||||||
IT Services — 0.9% | ||||||||
Dun & Bradstreet Corp., 6.88%, 08/15/26(e) | 419 | 447,366 | ||||||
|
| |||||||
Machinery — 0.6% | ||||||||
Mueller Water Products, Inc., 5.50%, 06/15/26(e) | 287 | 296,600 | ||||||
|
| |||||||
Media(e) — 2.7% | ||||||||
CCO Holdings LLC/CCO Holdings Capital Corp., 5.13%, 05/01/27 | 423 | 447,244 | ||||||
Sirius XM Radio, Inc., 5.38%, 07/15/26 | 430 | 443,975 | ||||||
Videotron Ltd., 5.38%, 06/15/24 | 408 | 449,539 | ||||||
|
| |||||||
1,340,758 | ||||||||
Metals & Mining — 0.6% | ||||||||
Arconic Corp., 6.00%, 05/15/25(e) | 138 | 148,734 | ||||||
Freeport-McMoRan, Inc., 4.13%, 03/01/28 | 143 | 150,322 | ||||||
|
| |||||||
299,056 | ||||||||
Oil, Gas & Consumable Fuels — 0.9% | ||||||||
Cheniere Energy Partners LP, 5.63%, 10/01/26 | 424 | 443,377 | ||||||
|
| |||||||
Pharmaceuticals — 0.9% | ||||||||
Bausch Health Cos., Inc., 5.75%, 08/15/27(e) | 416 | 447,720 | ||||||
|
| |||||||
Semiconductors & Semiconductor Equipment(e) — 1.8% | ||||||||
Microchip Technology, Inc., 4.25%, 09/01/25 | 430 | 449,241 | ||||||
Sensata Technologies BV, 5.63%, 11/01/24 | 401 | 445,110 | ||||||
|
| |||||||
894,351 | ||||||||
Software — 2.7% | ||||||||
CDK Global, Inc., 4.88%, 06/01/27 | 425 | 444,019 | ||||||
MSCI, Inc., 5.38%, 05/15/27(e) | 414 | 442,773 | ||||||
Nuance Communications, Inc., 5.63%, 12/15/26 | 142 | 148,922 | ||||||
PTC, Inc., 3.63%, 02/15/25(e) | 293 | 300,691 | ||||||
|
| |||||||
1,336,405 |
8 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Schedule of Investments (continued) March 31, 2021 | BlackRock Private Investments Fund (Percentages shown are based on Net Assets) |
Security | Par (000) | Value | ||||||
Textiles, Apparel & Luxury Goods(e) — 0.6% | ||||||||
Hanesbrands, Inc., 5.38%, 05/15/25 | $ | 139 | $ | 147,080 | ||||
William Carter Co., 5.50%, 05/15/25 | 140 | 149,316 | ||||||
|
| |||||||
296,396 | ||||||||
Wireless Telecommunication Services — 1.8% | ||||||||
Sprint Corp., 7.13%, 06/15/24 | 193 | 222,191 | ||||||
T-Mobile USA, Inc., 4.75%, 02/01/28 | 212 | 225,413 | ||||||
VICI Properties LP/VICI Note Co., Inc., 3.50%, 02/15/25(e) | 443 | 451,029 | ||||||
|
| |||||||
898,633 | ||||||||
|
| |||||||
Total Corporate Bonds — 29.6% (Cost: $14,764,379) | 14,725,855 | |||||||
|
| |||||||
Floating Rate Loan Interests(d) | ||||||||
Air Freight & Logistics — 0.6% | ||||||||
XPO Logistics, Inc., 2018 Term Loan B, 02/24/25(g) | 300 | 297,885 | ||||||
|
| |||||||
Airlines — 0.1% | ||||||||
AAdvantage Loyalty IP Ltd., 2021 Term Loan, 04/20/28(g) | 43 | 44,008 | ||||||
|
| |||||||
Building Products(g) — 0.5% | ||||||||
Advanced Drainage Systems, Inc., Term Loan B, 07/31/26 | 149 | 149,405 | ||||||
Jeld-Wen, Inc., 2017 1st Lien Term Loan, 12/14/24 | 100 | 99,375 | ||||||
|
| |||||||
248,780 | ||||||||
Capital Markets — 0.2% | ||||||||
Greenhill & Co., Inc., Term Loan B, 04/12/24(g) | 101 | 100,369 | ||||||
|
| |||||||
Chemicals(g) — 1.4% | ||||||||
Axalta Coating Systems US Holdings Inc., USD Term | ||||||||
Loan B3, 06/01/24 | 250 | 248,940 | ||||||
Messer Industries GmbH, 2018 USD Term Loan, 03/01/26 | 150 | 148,669 | ||||||
PQ Corporation, 2020 USD Incremental Term Loan B, 02/07/27 | 200 | 199,916 | ||||||
W.R. Grace & Co.-Conn., 2021 Term Loan B3, 03/30/28(a) | 92 | 91,310 | ||||||
|
| |||||||
688,835 | ||||||||
Commercial Services & Supplies — 1.9% | ||||||||
Aramark Services, Inc., 2019 Term Loan B4, (1 mo. LIBOR + 1.75%), 1.86%, 01/15/27 | 303 | 298,307 | ||||||
GFL Environmental, Inc., 2020 Term Loan, 05/30/25(g) | 299 | 299,000 | ||||||
Prime Security Services Borrower LLC, 2021 Term Loan, 09/23/26(g) | 250 | 248,827 | ||||||
US Ecology, Inc., Term Loan B, (1 mo. LIBOR + 2.50%), 2.61%, 11/01/26 | 100 | 99,456 | ||||||
|
| |||||||
945,590 | ||||||||
Construction & Engineering — 0.0% | ||||||||
Brand Energy & Infrastructure Services, Inc., 2017 Term Loan, 06/21/24(g) | 2 | 1,539 | ||||||
|
| |||||||
Construction Materials — 0.4% | ||||||||
GYP Holdings III Corp., 2018 Term Loan B, 06/01/25(g) | 200 | 198,850 | ||||||
|
|
Security | Par (000) | Value | ||||||
Containers & Packaging — 0.2% | ||||||||
Berry Global, Inc., 2021 Term Loan Z, (1 mo. LIBOR + 1.75%), 1.90%, 07/01/26 | $ | 100 | $ | 99,109 | ||||
|
| |||||||
Diversified Consumer Services — 0.4% | ||||||||
Bright Horizons Family Solutions, LLC, 2017 Term Loan B, (PRIME + 0.75%), 4.00%, 11/07/23 | 101 | 99,856 | ||||||
ServiceMaster Company, LLC (The), 2019 Term Loan D, (1 mo. LIBOR + 1.75%), 1.88%, 11/05/26 | 100 | 99,589 | ||||||
|
| |||||||
199,445 | ||||||||
Diversified Telecommunication Services(g) — 1.6% | ||||||||
CenturyLink, Inc., 2020 Term Loan B, 03/15/27 | 201 | 198,149 | ||||||
Iridium Satellite LLC, 2021 Term Loan B, 11/04/26 | 299 | 299,535 | ||||||
Level 3 Financing, Inc., 2019 Term Loan B, 03/01/27 | 301 | 296,861 | ||||||
|
| |||||||
794,545 | ||||||||
Electrical Equipment — 0.4% | ||||||||
Generac Power Systems, Inc., 2019 Term Loan B, 12/13/26(g) | 200 | 200,000 | ||||||
|
| |||||||
Electronic Equipment, Instruments & Components — 0.2% | ||||||||
CDW LLC, 2016 Term Loan B, 10/13/26(g) | 100 | 100,081 | ||||||
|
| |||||||
Energy Equipment & Services — 0.6% | ||||||||
Dell International LLC, 2021 Term Loan B, 09/19/25(g) | 299 | 298,599 | ||||||
|
| |||||||
Environmental, Maintenance, & Security Service — 0.6% | ||||||||
Asplundh Tree Expert LLC, 2021 Term Loan B, 09/07/27(g) | 299 | 298,267 | ||||||
|
| |||||||
Equity Real Estate Investment Trusts (REITs) — 0.6% | ||||||||
VICI Properties LLC, Replacement Term Loan B, 12/20/24(g) | 302 | 298,361 | ||||||
|
| |||||||
Food & Staples Retailing — 0.3% | ||||||||
BJ’s Wholesale Club, Inc., 2017 1st Lien Term Loan, 02/03/24(g) | 150 | 149,841 | ||||||
|
| |||||||
Food Products(g) — 1.8% | ||||||||
B&G Foods, Inc., 2019 Term Loan B4, 10/10/26 | 300 | 299,400 | ||||||
Hostess Brands LLC, 2019 Term Loan, 08/03/25 | 300 | 298,167 | ||||||
JBS USA LUX SA, 2019 Term Loan B, 05/01/26 | 300 | 298,172 | ||||||
|
| |||||||
895,739 | ||||||||
Health Care Equipment & Supplies — 1.1% | ||||||||
Avantor Funding, Inc., 2020 Incremental Term Loan B4, 11/06/27(g) | 546 | 545,360 | ||||||
|
| |||||||
Health Care Providers & Services — 0.6% | ||||||||
HCA, Inc., Term Loan B12, 03/13/25(g) | 300 | 299,679 | ||||||
|
| |||||||
Health Care Technology — 0.5% | ||||||||
IQVIA, Inc., 2018 USD Term Loan B3, 06/11/25(g) | 250 | 248,333 | ||||||
|
| |||||||
Hotels, Restaurants & Leisure — 3.2% | ||||||||
1011778 B.C. Unlimited Liability Co., Term Loan B4, (1 mo. LIBOR + 1.75%), 1.86%, 11/19/26 | 454 | 445,201 | ||||||
Aristocrat Technologies, Inc., 2018 1st Lien Term Loan, (3 mo. LIBOR + 1.75%), 1.97%, 10/19/24 | 251 | 249,466 | ||||||
Boyd Gaming Corp., Term Loan B3, 09/15/23(g) | 99 | 99,283 | ||||||
Churchill Downs Incorporated, 2017 Term Loan B, (1 mo. LIBOR + 2.00%), 2.11%, 12/27/24 | 100 | 99,119 |
SCHEDULEOF INVESTMENTS | 9 |
Schedule of Investments (continued) March 31, 2021 | BlackRock Private Investments Fund (Percentages shown are based on Net Assets) |
Security | Par (000) | Value | ||||||
Hotels, Restaurants & Leisure (continued) | ||||||||
Churchill Downs, Inc., 2021 Incremental Term Loan B1, (3 mo. LIBOR + 2.00%), 2.12%, 03/10/28(a) | $ | 159 | $ | 158,006 | ||||
Hilton Worldwide Finance LLC, 2019 Term Loan B2, 06/22/26(g) | 100 | 99,025 | ||||||
Stars Group Holdings BV, 2018 USD Incremental Term Loan, 07/10/25(g) | 446 | 446,494 | ||||||
|
| |||||||
1,596,594 | ||||||||
Household Durables — 0.7% | ||||||||
Reynolds Consumer Products LLC, Term Loan, 02/04/27(g) | 349 | 347,076 | ||||||
|
| |||||||
Household Products — 0.6% | ||||||||
Spectrum Brands, Inc., 2021 Term Loan, 03/03/28(g) | 299 | 298,067 | ||||||
|
| |||||||
Interactive Media & Services(g) — 1.4% | ||||||||
Adevinta ASA, USD Term Loan B, 04/20/28 | 199 | 198,876 | ||||||
Go Daddy Operating Co. LLC, 2017 Repriced Term Loan, 02/15/24 | 501 | 496,852 | ||||||
|
| |||||||
695,728 | ||||||||
IT Services(g) — 1.3% | ||||||||
Trans Union, LLC, 2019 Term Loan B5, 11/16/26 | 336 | 333,844 | ||||||
WEX, Inc., 2021 Term Loan, 03/18/28 | 300 | 298,650 | ||||||
|
| |||||||
632,494 | ||||||||
Life Sciences Tools & Services — 1.0% | ||||||||
PPD, Inc., Initial Term Loan, (1 mo. LIBOR + 2.25%, 0.50% Floor), 2.75%, 01/13/28 | 498 | 495,067 | ||||||
|
| |||||||
Machinery(g) — 1.2% | ||||||||
Allison Transmission, Inc., 2019 Term Loan B, 03/29/26 | 100 | 100,250 | ||||||
Gardner Denver, Inc., 2020 USD Term Loan B, 03/01/27 | 299 | 298,372 | ||||||
Terex Corporation 2018 Term Loan B, 01/31/24 | 200 | 198,898 | ||||||
|
| |||||||
597,520 | ||||||||
Media — 6.0% | ||||||||
Charter Communications Operating LLC, 2019 Term Loan B1, 04/30/25(g) | 400 | 398,956 | ||||||
Cogeco Communications Finance (USA) LP, Term Loan B, 01/03/25(g) | 201 | 198,676 | ||||||
CSC Holdings LLC, 2019 Term Loan B5, (1 mo. LIBOR + 2.50%), 2.61%, 04/15/27 | 753 | 743,053 | ||||||
E.W. Scripps Co., 2020 Term Loan B3, (1 mo. LIBOR + 3.00%, 0.75% Floor), 3.75%, 01/07/28 | 150 | 148,947 | ||||||
Gray Television, Inc., 2018 Term Loan C, (1 mo. LIBOR + 2.50%), 2.62%, 01/02/26 | 150 | 148,899 | ||||||
Midcontinent Communications, 2019 Term Loan B, (1 mo. LIBOR + 1.75%), 1.86%, 08/15/26 | 199 | 198,496 | ||||||
Nexstar Broadcasting, Inc., 2019 Term Loan B4, 09/19/26(g) | 250 | 247,908 | ||||||
Playtika Holding Corp., 2021 Term Loan, 03/11/28(g) | 161 | 159,994 |
Security | Par (000) | Value | ||||||
Media (continued) | ||||||||
Virgin Media Bristol LLC, 2020 USD Term Loan Q, 01/31/29(g) | $ | 350 | $ | 349,083 | ||||
WMG Acquisition Corp., 2021 Term Loan G, 01/20/28(g) | 423 | 421,016 | ||||||
|
| |||||||
3,015,028 | ||||||||
Oil, Gas & Consumable Fuels — 0.5% | ||||||||
Murphy USA, Inc., Term Loan B, (1 mo. LIBOR + 1.75%, 0.50% Floor), 2.25%, 01/31/28(a) | 250 | 250,938 | ||||||
|
| |||||||
Personal Products — 0.2% | ||||||||
Prestige Brands, Inc., Term Loan B4, 01/26/24(g) | 88 | 88,301 | ||||||
|
| |||||||
Pharmaceuticals — 4.0% | ||||||||
Catalent Pharma Solutions, Inc., 2021 Term Loan B3, (1 mo. LIBOR + 2.00%, 0.50% Floor), 2.50%, 02/22/28 | 549 | 548,769 | ||||||
Elanco Animal Health, Inc., Term Loan B, 08/01/27(g) | 250 | 246,688 | ||||||
Grifols Worldwide Operations USA, Inc., USD 2019 Term Loan B, 11/15/27(g) | 502 | 496,127 | ||||||
Valeant Pharmaceuticals International, Inc., 2018 Term Loan B, 06/02/25(g) | 699 | 696,351 | ||||||
|
| |||||||
1,987,935 | ||||||||
Real Estate Management & Development — 0.4% | ||||||||
Cushman & Wakefield U.S. Borrower, LLC, 2020 Term Loan B, (1 mo. LIBOR + 2.75%), 2.86%, 08/21/25 | 202 | 197,167 | ||||||
|
| |||||||
Road & Rail — 0.2% | ||||||||
Genesee & Wyoming, Inc., Term Loan, | 100 | 99,343 | ||||||
|
| |||||||
Semiconductors & Semiconductor Equipment — 0.7% | ||||||||
Cabot Microelectronics Corp., 2019 Term Loan B1, (1 mo. LIBOR + 2.00%), 2.13%, 11/14/25(a) | 249 | 249,287 | ||||||
ON Semiconductor Corp., 2019 Term Loan B, 09/19/26(g) | 100 | 99,474 | ||||||
|
| |||||||
348,761 | ||||||||
Software(g) — 1.7% | ||||||||
Cloudera, Inc., Term Loan B, 12/22/27(a) | 249 | 248,377 | ||||||
McAfee LLC, 2018 USD Term Loan B, 09/30/24 | 298 | 298,077 | ||||||
SS&C Technologies, Inc., 2018 Term Loan B5, 04/16/25 | 301 | 297,614 | ||||||
|
| |||||||
844,068 | ||||||||
Specialty Retail(g) — 1.0% | ||||||||
Belron Finance US LLC, 2019 USD Term Loan B, 10/30/26 | 349 | 346,498 | ||||||
IAA, Inc., Term Loan B, 06/28/26 | 149 | 148,105 | ||||||
|
| |||||||
494,603 | ||||||||
Technology Hardware, Storage & Peripherals — 0.6% | ||||||||
Western Digital Corp., 2018 Term Loan B4, (1 mo. LIBOR + 1.75%), 1.86%, 04/29/23 | 300 | 299,502 | ||||||
|
| |||||||
Trading Companies & Distributors — 0.5% | ||||||||
Beacon Roofing Supply, Inc., 2017 Term Loan B, 01/02/25(g) | 250 | 248,267 | ||||||
|
|
10 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Schedule of Investments (continued) March 31, 2021 | BlackRock Private Investments Fund (Percentages shown are based on Net Assets) |
Security | Par (000) | Value | ||||||
Wireless Telecommunication Services — 0.7% | ||||||||
SBA Senior Finance II LLC, 2018 Term Loan B, 04/11/25(g) | $ | 351 | $ | 346,598 | ||||
|
| |||||||
Total Floating Rate Loan Interests — 39.9% |
| 19,836,272 | ||||||
|
| |||||||
Total Long-Term Investments — 85.5% |
| 42,510,858 | ||||||
|
| |||||||
Shares | ||||||||
Short-Term Securities | ||||||||
Money Market Funds — 46.6% | ||||||||
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.01%(h)(i) | 23,164,229 | 23,164,229 | ||||||
|
| |||||||
Total Short-Term Securities — 46.6% |
| 23,164,229 | ||||||
|
| |||||||
Total Investments — 132.1% |
| 65,675,087 | ||||||
Liabilities in Excess of Other Assets — (32.1)% |
| (15,965,549 | ) | |||||
|
| |||||||
Net Assets — 100.0% | $ | 49,709,538 | ||||||
|
|
(a) | Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. |
(b) | Restricted security as to resale, excluding 144A securities. The Fund held restricted securities with a current value of $3,000,000, representing 6.04% of its net assets as of period end, and an original cost of $3,000,000. |
(c) | Investment does not issue shares. |
(d) | Variable rate security. Interest rate resets periodically. The rate shown is the effective interest rate as of period end. Security description also includes the reference rate and spread if published and available. |
(e) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors. |
(f) | When-issued security. |
(g) | Represents an unsettled loan commitment at period end. Certain details associated with this purchase are not known prior to the settlement date, including coupon rate. |
(h) | Affiliate of the Fund. |
(i) | Annualized 7-day yield as of period end. |
For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.
Affiliates
Investments in issuers considered to be affiliate(s) of the Fund during the period ended March 31, 2021 for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:
Affiliated Issuer | Value at 03/01/21(a) | Purchases at Cost | Proceeds from Sales | Net Realized Gain (Loss) | Change in Unrealized Appreciation (Depreciation) | Value at 03/31/21 | Shares Held at 03/31/21 | Income | Capital Gain Distributions from Underlying Funds | |||||||||||||||||||||||||||
BlackRock Liquidity Funds, T-Fund, Institutional Class | $ | — | $ | 23,164,229 | (b) | $ | — | $ | — | $ | — | $ | 23,164,229 | 23,164,229 | $ | 713 | $ | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(a) | Commencement of operations. |
(b) | Represents net amount purchased (sold). |
Fair Value Hierarchy as of Period End
Various inputs are used in determining the fair value of financial instruments. For a description of the input levels and information about the Fund’s policy regarding valuation of financial instruments, refer to the Notes to Financial Statements.
The following table summarizes the Fund’s investments categorized in the fair value hierarchy. The breakdown of the Fund’s investments into major categories is disclosed in the Schedule of Investments above.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Investments | ||||||||||||||||
Long-Term Investments | ||||||||||||||||
Private Equity Investments | ||||||||||||||||
Direct Investments | $ | — | $ | — | $ | 3,000,000 | $ | 3,000,000 | ||||||||
Asset-Backed Securities | — | 4,948,731 | — | 4,948,731 | ||||||||||||
Corporate Bonds | — | 14,725,855 | — | 14,725,855 | ||||||||||||
Floating Rate Loan Interests | — | 18,838,354 | 997,918 | 19,836,272 | ||||||||||||
Short-Term Securities | ||||||||||||||||
Money Market Funds | $ | 23,164,229 | $ | — | $ | — | $ | 23,164,229 | ||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 23,164,229 | $ | 38,512,940 | $ | 3,997,918 | $ | 65,675,087 | |||||||||
|
|
|
|
|
|
|
|
SCHEDULES OF INVESTMENTS | 11 |
Schedule of Investments (continued) March 31, 2021 | BlackRock Private Investments Fund (Percentages shown are based on Net Assets) |
A reconciliation of Level 3 financial instruments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:
Direct Investments | Floating Rate Loan Interests | Total | ||||||||||
Assets | ||||||||||||
Opening balance, as of March 1, 2021 | $ | — | $ | — | $ | — | ||||||
Transfers into Level 3 | — | — | — | |||||||||
Transfers out of Level 3 | — | — | — | |||||||||
Accrued discounts/premiums | — | (7 | ) | (7 | ) | |||||||
Net realized gain (loss) | — | (5 | ) | (5 | ) | |||||||
Net change in unrealized appreciation (depreciation)(a) | — | (4,036 | ) | (4,036 | ) | |||||||
Purchases | 3,000,000 | 1,002,680 | 4,002,680 | |||||||||
Sales | — | (714 | ) | (714 | ) | |||||||
|
|
|
|
|
| |||||||
Closing balance, as of March 31, 2021 | $ | 3,000,000 | $ | 997,918 | $ | 3,997,918 | ||||||
|
|
|
|
|
|
(a) | Included in the related net change in unrealized appreciation (depreciation) in the Statement of Operations. |
The Fund’s financial instruments that are categorized as Level 3 were valued utilizing third party pricing information without adjustment. Such valuations are based on unobservable inputs. A significant change in third party information could result in a significantly lower or higher value of such Level 3 financial instruments.
See notes to financial statements.
12 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Statement of Assets and Liabilities March 31, 2021 |
BlackRock Private Investments Fund | ||||
ASSETS | ||||
Investments at value — unaffiliated(a) | $ | 42,510,858 | ||
Investments at value — affiliated(b) | 23,164,229 | |||
Receivables: | ||||
Dividends — affiliated | 713 | |||
Interest — unaffiliated | 239,674 | |||
From the Manager | 33,806 | |||
Principal paydowns | 4,280 | |||
Deferred offering costs | 420,492 | |||
|
| |||
Total assets | 66,374,052 | |||
|
| |||
LIABILITIES | ||||
Bank overdraft | 1,169 | |||
Payables: | ||||
Investments purchased | 16,106,559 | |||
Offering costs | 459,293 | |||
Trustees’ and Officer’s fees | 3,822 | |||
Other accrued expenses | 93,618 | |||
Service fees | 53 | |||
|
| |||
Total liabilities | 16,664,514 | |||
|
| |||
NET ASSETS | $ | 49,709,538 | ||
|
| |||
NET ASSETS CONSIST OF | ||||
Paid-in capital | $ | 50,000,000 | ||
Accumulated loss | (290,462 | ) | ||
|
| |||
NET ASSETS | $ | 49,709,538 | ||
|
| |||
NET ASSET VALUE | ||||
Institutional | ||||
Net assets | $ | 49,461,043 | ||
|
| |||
Shares outstanding | 4,975,000 | |||
|
| |||
Net asset value | $ | 9.94 | ||
|
| |||
Shares authorized | Unlimited | |||
|
| |||
Par value | $ | 0.001 | ||
|
| |||
Class D | ||||
Net assets | $ | 248,495 | ||
|
| |||
Shares outstanding | 25,000 | |||
|
| |||
Net asset value | $ | 9.94 | ||
|
| |||
Shares authorized | Unlimited | |||
|
| |||
Par value | $ | 0.001 | ||
|
| |||
(a) Investments at cost — unaffiliated | $ | 42,687,457 | ||
(b) Investments at cost — affiliated | $ | 23,164,229 |
See notes to financial statements.
FINANCIAL STATEMENTS | 13 |
Period Ended March 31, 2021
BlackRock Private Investments Fund(a) | ||||
INVESTMENT INCOME | ||||
Dividends — affiliated | $ | 713 | ||
Interest — unaffiliated | 31,097 | |||
Other income | 3,624 | |||
|
| |||
Total investment income | 35,434 | |||
|
| |||
EXPENSES | ||||
Investment advisory | 73,993 | |||
Professional | 71,969 | |||
Portfolio investment fees | 45,000 | |||
Offering | 38,801 | |||
Accounting services | 7,750 | |||
Transfer agent | 6,667 | |||
Trustees and Officer | 3,822 | |||
Registration | 3,397 | |||
Printing and postage | 1,904 | |||
Transfer agent — class specific | 1,699 | |||
Custodian | 93 | |||
Service — class specific | 53 | |||
Miscellaneous | 3,654 | |||
|
| |||
Total expenses | 258,802 | |||
Less: | ||||
Fees waived and/or reimbursed by the Manager | (107,799 | ) | ||
Transfer agent fees waived and/or reimbursed — class specific | (1,699 | ) | ||
|
| |||
Total expenses after fees waived and/or reimbursed | 149,304 | |||
|
| |||
Net investment loss | (113,870 | ) | ||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain from: | ||||
Investments — unaffiliated | 7 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments — unaffiliated | (176,599 | ) | ||
|
| |||
Net realized and unrealized loss | (176,592 | ) | ||
|
| |||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (290,462 | ) | |
|
|
(a) | The Fund commenced operations on March 1, 2021. |
See notes to financial statements.
14 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Statement of Changes in Net Assets
BlackRock Private Investments Fund | ||||
Period from 03/01/21(a) to 03/31/21 | ||||
INCREASE (DECREASE) IN NET ASSETS | ||||
OPERATIONS | ||||
Net investment loss | $ | (113,870 | ) | |
Net realized gain | 7 | |||
Net change in unrealized depreciation | (176,599 | ) | ||
|
| |||
Net decrease in net assets resulting from operations | (290,462 | ) | ||
|
| |||
CAPITAL SHARE TRANSACTIONS | ||||
Net proceeds from the issuance of shares | 49,900,000 | |||
|
| |||
NET ASSETS | ||||
Total increase in net assets | 49,609,538 | |||
Beginning of period | 100,000 | |||
|
| |||
End of period | $ | 49,709,538 | ||
|
|
(a) | Commencement of operations. |
See notes to financial statements.
FINANCIAL STATEMENTS | 15 |
(For a share outstanding throughout the period)
BlackRock Private Investments Fund | ||||
Institutional | ||||
Period from 03/01/21(a) to 03/31/21 | ||||
Net asset value, beginning of period | $ | 10.00 | ||
|
| |||
Net investment loss(b) | (0.02 | ) | ||
Net realized and unrealized loss | (0.04 | ) | ||
|
| |||
Net decrease from investment operations | (0.06 | ) | ||
|
| |||
Net asset value, end of period | $ | 9.94 | ||
|
| |||
Total Return(c) | ||||
Based on net asset value | (0.60 | )%(d) | ||
|
| |||
Ratios to Average Net Assets | ||||
Total expenses | 3.33 | %(e)(f)(g) | ||
|
| |||
Total expenses after fees waived and/or reimbursed | 2.56 | %(e)(f)(g) | ||
|
| |||
Net investment loss | (1.72 | )%(e)(f)(g) | ||
|
| |||
Supplemental Data | ||||
|
| |||
Net assets, end of period (000) | $ | 49,461 | ||
|
| |||
Portfolio turnover rate | — | %(h) | ||
|
|
(a) | Commencement of operations. |
(b) | Based on average shares outstanding. |
(c) | Where applicable, assumes the reinvestment of distributions. The Fund is a continuously offered closed-end fund, the Shares of which are offered at net asset value. No secondary market for the Fund’s Shares exists. |
(d) | Aggregate total return. |
(e) | Annualized. |
(f) | Audit, printing, offering costs and portfolio investment fees were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses, total expenses after fees waived and/or reimbursed and net investment loss would have been 6.11%, 3.54% and (2.70)%, respectively. |
(g) | Excludes expenses incurred indirectly as a result of investments in underlying funds of 0.11%. |
(h) | Rounds to less than 1%. |
See notes to financial statements.
16 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Financial Highlights (continued)
(For a share outstanding throughout the period)
BlackRock Private Investments Fund (continued) | ||||
Class D | ||||
Period from 03/01/21(a) to 03/31/21 | ||||
Net asset value, beginning of period | $ | 10.00 | ||
|
| |||
Net investment loss(b) | (0.02 | ) | ||
Net realized and unrealized loss | (0.04 | ) | ||
|
| |||
Net decrease from investment operations | (0.06 | ) | ||
|
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Net asset value, end of period | $ | 9.94 | ||
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Total Return(c) | ||||
Based on net asset value | (0.60 | )%(d) | ||
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Ratios to Average Net Assets | ||||
Total expenses | 7.59 | %(e)(f)(g) | ||
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Total expenses after fees waived and/or reimbursed | 2.81 | %(e)(f)(g) | ||
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Net investment loss | (1.97 | )%(e)(f)(g) | ||
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Supplemental Data | ||||
Net assets, end of period (000) | $ | 248 | ||
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Portfolio turnover rate | — | %(h) | ||
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(a) | Commencement of operations. |
(b) | Based on average shares outstanding. |
(c) | Where applicable, assumes the reinvestment of distributions. The Fund is a continuously offered closed-end fund, the Shares of which are offered at net asset value. No secondary market for the Fund’s Shares exists. |
(d) | Aggregate total return. |
(e) | Annualized. |
(f) | Audit, printing, offering costs and portfolio investment fees were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses, total expenses after fees waived and/or reimbursed and net investment loss would have been 10.36%, 3.79% and (2.95)%, respectively. |
(g) | Excludes expenses incurred indirectly as a result of investments in underlying funds of 0.11%. |
(h) | Rounds to less than 1%. |
See notes to financial statements.
FINANCIAL HIGHLIGHTS | 17 |
1. | ORGANIZATION |
BlackRock Private Investments Fund (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund is registered as a non-diversified, closed-end management investment company. The Fund is organized as a Delaware statutory trust. The Fund engages in a continuous offering of shares. The Fund determines and makes available for publication the net asset value (“NAV”) of its shares on a quarterly basis. The Fund’s shares are offered for sale quarterly through its Distributor (defined below) at the then-current NAV. The price of the shares during the Fund’s continuous offering will fluctuate over time with the NAV of the shares.
The Fund offers two classes of shares designated as Institutional Shares and Class D Shares. Both classes of shares have identical voting, dividend, liquidation and other rights and will be subject to the same terms and conditions, except that Class D Shares bear expenses related to the shareholder servicing and distribution of such shares. Prior to commencement of operations on March 1, 2021, the Fund had no operations other than those relating to organizational matters and the sale of 10,000 Common Shares to BlackRock Financial Management, Inc., an affiliate of the Fund, for $100,000. Investment operations for the Fund commenced on March 1, 2021.
The Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of non-index fixed-income mutual funds and all BlackRock-advised closed-end funds referred to as the BlackRock Fixed-Income Complex.
2. | SIGNIFICANT ACCOUNTING POLICIES |
The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:
Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are executed. Realized gains and losses on investment transactions are determined using the specific identification method. Dividend income and capital gain distributions, if any, are recorded on the ex-dividend dates. Non-cash dividends, if any, are recorded on the ex-dividend dates at fair value. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized daily on an accrual basis. Portfolio investment fees that are paid outside of a private investment’s commitment, if any, are expensed as incurred. Income, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.
Segregation and Collateralization: In cases where the Fund enters into certain investments that would be treated as “senior securities” for 1940 Act purposes, the Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments. Doing so allows the investment to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Fund may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.
Distributions: Distributions from net investment income are declared annually and paid annually. Distributions of capital gains are recorded on the ex-dividend dates and made at least annually. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.
Deferred Compensation Plan: Under the Deferred Compensation Plan (the “Plan”) approved by the Board of Trustees of the Fund (the “Board”), the trustees who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Trustees”), may defer a portion of their annual complex-wide compensation. Deferred amounts earn an approximate return as though equivalent dollar amounts had been invested in common shares of certain funds in the BlackRock Fixed-Income Complex selected by the Independent Trustees. This has the same economic effect for the Independent Trustees as if the Independent Trustees had invested the deferred amounts directly in certain funds in the BlackRock Fixed-Income Complex.
The Plan is not funded and obligations thereunder represent general unsecured claims against the general assets of the Fund, as applicable. Deferred compensation liabilities, if any, are included in the Trustees’ and Officer’s fees payable in the Statement of Assets and Liabilities and will remain as a liability of the Fund until such amounts are distributed in accordance with the Plan.
Organization and Offering Costs: Organization costs associated with the establishment of the Fund in the amount of $392,500 were paid by the Manager. The Fund is not obligated to repay any such organizational costs paid by the Manager. Offering costs are amortized over a 12-month period beginning with the commencement of operations of a class of shares.
Indemnifications: In the normal course of business, the Fund enters into contracts that contain a variety of representations that provide general indemnification. The Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against the Fund, which cannot be predicted with any certainty.
Other: Expenses directly related to the Fund or its classes are charged to the Fund or the applicable class. Expenses directly related to the Fund and other shared expenses prorated to the Fund are allocated daily to each class based on its relative net assets or other appropriate methods. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods.
18 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Notes to Financial Statements (continued)
3. | INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS |
Investment Valuation Policies: The Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) each day that the Fund is open for business and, for financial reporting purposes, as of the report date. U.S. GAAP defines fair value as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board. If a security’s market price is not readily available or does not otherwise accurately represent the fair value of the security, the security will be valued in accordance with a policy approved by the Board as reflecting fair value. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.
Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of the Fund’s assets and liabilities:
• | Equity investments traded on a recognized securities exchange are valued at that day’s official closing price, as applicable, on the exchange where the stock is primarily traded. Equity investments traded on a recognized exchange for which there were no sales on that day may be valued at the last available bid (long positions) or ask (short positions) price. |
• | Fixed-income investments for which market quotations are readily available are generally valued using the last available bid price or current market quotations provided by independent dealers or third party pricing services. Floating rate loan interests are valued at the mean of the bid prices from one or more independent brokers or dealers as obtained from a third party pricing service. Pricing services generally value fixed-income securities assuming orderly transactions of an institutional round lot size, but a fund may hold or transact in such securities in smaller, odd lot sizes. Odd lots may trade at lower prices than institutional round lots. The pricing services may use matrix pricing or valuation models that utilize certain inputs and assumptions to derive values, including transaction data (e.g., recent representative bids and offers), market data, credit quality information, perceived market movements, news, and other relevant information. Certain fixed-income securities, including asset-backed and mortgage related securities may be valued based on valuation models that consider the estimated cash flows of each tranche of the entity, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. The amortized cost method of valuation may be used with respect to debt obligations with sixty days or less remaining to maturity unless the Manager determines such method does not represent fair value. |
• | Investments in open-end U.S. mutual funds (including money market funds) are valued at that day’s published NAV. |
If events (e.g., a market closure, market volatility, company announcement or a natural disaster) occur that are expected to materially affect the value of such investment, or in the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that the Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.
For investments in equity or debt issued by privately held companies or funds (“Private Company” or collectively, the “Private Companies”) and other Fair Valued Investments, the fair valuation approaches that are used by the Global Valuation Committee and third party pricing services utilize one or a combination of, but not limited to, the following inputs.
Standard Inputs Generally Considered By Third Party Pricing Services | ||
Market approach | (i) recent market transactions, including subsequent rounds of financing, in the underlying investment or comparable issuers; (ii) recapitalizations and other transactions across the capital structure; and (iii) market multiples of comparable issuers. | |
Income approach | (i) future cash flows discounted to present and adjusted as appropriate for liquidity, credit, and/or market risks; (ii) quoted prices for similar investments or assets in active markets; and (iii) other risk factors, such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates. | |
Cost approach | (i) audited or unaudited financial statements, investor communications and financial or operational metrics issued by the Private Company; (ii) changes in the valuation of relevant indices or publicly traded companies comparable to the Private Company; (iii) relevant news and other public sources; and (iv) known secondary market transactions in the Private Company’s interests and merger or acquisition activity in companies comparable to the Private Company. |
Investments in series of preferred stock issued by Private Companies are typically valued utilizing market approach in determining the enterprise value of the company. Such investments often contain rights and preferences that differ from other series of preferred and common stock of the same issuer. Enterprise valuation techniques such as an option pricing model (“OPM”), a probability weighted expected return model (“PWERM”), current value method or a hybrid of those techniques are used, as deemed appropriate under the circumstances. The use of these valuation techniques involve a determination of the exit scenarios of the investment in order to appropriately allocate the enterprise value of the company among the various parts of its capital structure.
NOTESTO FINANCIAL STATEMENTS | 19 |
Notes to Financial Statements (continued)
The Private Companies are not subject to the public company disclosure, timing, and reporting standards applicable to other investments held by the Fund. Typically, the most recently available information by a Private Company is as of a date that is earlier than the date the Fund is calculating its NAV. This factor may result in a difference between the value of the investment and the price the Fund could receive upon the sale of the investment.
Fair Value Hierarchy: Various inputs are used in determining the fair value of financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:
• | Level 1 — Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access; |
• | Level 2 — Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs); and |
• | Level 3 — Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Global Valuation Committee’s assumptions used in determining the fair value of financial instruments). |
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by Private Companies that may not have a secondary market and/or may have a limited number of investors. The categorization of a value determined for financial instruments is based on the pricing transparency of the financial instruments and is not necessarily an indication of the risks associated with investing in those securities.
4. | SECURITIES AND OTHER INVESTMENTS |
Asset-Backed and Mortgage-Backed Securities: Asset-backed securities are generally issued as pass-through certificates or as debt instruments. Asset-backed securities issued as pass-through certificates represent undivided fractional ownership interests in an underlying pool of assets. Asset-backed securities issued as debt instruments, which are also known as collateralized obligations, are typically issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. The yield characteristics of certain asset-backed securities may differ from traditional debt securities. One such major difference is that all or a principal part of the obligations may be prepaid at any time because the underlying assets (i.e., loans) may be prepaid at any time. As a result, a decrease in interest rates in the market may result in increases in the level of prepayments as borrowers, particularly mortgagors, refinance and repay their loans. An increased prepayment rate with respect to an asset-backed security will have the effect of shortening the maturity of the security. In addition, a fund may subsequently have to reinvest the proceeds at lower interest rates. If a fund has purchased such an asset-backed security at a premium, a faster than anticipated prepayment rate could result in a loss of principal to the extent of the premium paid.
For mortgage pass-through securities (the “Mortgage Assets”) there are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by Ginnie Mae are guaranteed as to the timely payment of principal and interest by Ginnie Mae and such guarantee is backed by the full faith and credit of the United States. However, mortgage-related securities issued by Freddie Mac and Fannie Mae, including Freddie Mac and Fannie Mae guaranteed mortgage pass-through certificates, which are solely the obligations of Freddie Mac and Fannie Mae, are not backed by or entitled to the full faith and credit of the United States, but are supported by the right of the issuer to borrow from the U.S. Treasury.
Non-agency mortgage-backed securities are securities issued by non-governmental issuers and have no direct or indirect government guarantees of payment and are subject to various risks. Non-agency mortgage loans are obligations of the borrowers thereunder only and are not typically insured or guaranteed by any other person or entity. The ability of a borrower to repay a loan is dependent upon the income or assets of the borrower. A number of factors, including a general economic downturn, acts of God, terrorism, social unrest and civil disturbances, may impair a borrower’s ability to repay its loans.
Collateralized Debt Obligations: Collateralized debt obligations (“CDOs”), including collateralized bond obligations (“CBOs”) and collateralized loan obligations (“CLOs”), are types of asset-backed securities. A CDO is an entity that is backed by a diversified pool of debt securities (CBOs) or syndicated bank loans (CLOs). The cash flows of the CDO can be split into multiple segments, called “tranches,” which will vary in risk profile and yield. The riskiest segment is the subordinated or “equity” tranche. This tranche bears the greatest risk of defaults from the underlying assets in the CDO and serves to protect the other, more senior, tranches from default in all but the most severe circumstances. Since it is shielded from defaults by the more junior tranches, a “senior” tranche will typically have higher credit ratings and lower yields than their underlying securities, and often receive investment grade ratings from one or more of the nationally recognized rating agencies. Despite the protection from the more junior tranches, senior tranches can experience substantial losses due to actual defaults, increased sensitivity to future defaults and the disappearance of one or more protecting tranches as a result of changes in the credit profile of the underlying pool of assets.
Floating Rate Loan Interests: Floating rate loan interests are typically issued to companies (the “borrower”) by banks, other financial institutions, or privately and publicly offered corporations (the “lender”). Floating rate loan interests are generally non-investment grade, often involve borrowers whose financial condition is troubled or uncertain and companies that are highly leveraged or in bankruptcy proceedings. In addition, transactions in floating rate loan interests may settle on a delayed basis, which may result in proceeds from the sale not being readily available for a fund to make additional investments or meet its redemption obligations. Floating rate loan interests may include fully funded term loans or revolving lines of credit. Floating rate loan interests are typically senior in the corporate capital structure of the borrower. Floating rate loan interests generally pay interest at rates that are periodically determined by reference to a base lending rate plus a premium. Since the rates reset only periodically, changes in prevailing interest rates (and particularly sudden and significant changes) can be expected to cause some fluctuations in the NAV of a fund to the extent that it invests in floating rate loan interests. The base lending rates are generally the lending rate offered by one or more European banks, such as the London Interbank Offered Rate (“LIBOR”), the prime rate offered by one or more U.S. banks or the certificate of deposit rate. Floating rate loan interests may involve foreign borrowers, and investments may be denominated in foreign currencies. These investments are treated as investments in debt securities for purposes of a fund’s investment policies.
20 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Notes to Financial Statements (continued)
When a fund purchases a floating rate loan interest, it may receive a facility fee and when it sells a floating rate loan interest, it may pay a facility fee. On an ongoing basis, a fund may receive a commitment fee based on the undrawn portion of the underlying line of credit amount of a floating rate loan interest. Facility and commitment fees are typically amortized to income over the term of the loan or term of the commitment, respectively. Consent and amendment fees are recorded to income as earned. Prepayment penalty fees, which may be received by a fund upon the prepayment of a floating rate loan interest by a borrower, are recorded as realized gains. A fund may invest in multiple series or tranches of a loan. A different series or tranche may have varying terms and carry different associated risks.
Floating rate loan interests are usually freely callable at the borrower’s option. A fund may invest in such loans in the form of participations in loans (“Participations”) or assignments (“Assignments”) of all or a portion of loans from third parties. Participations typically will result in a fund having a contractual relationship only with the lender, not with the borrower. A fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the Participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing Participations, a fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement, nor any rights of offset against the borrower. A fund may not benefit directly from any collateral supporting the loan in which it has purchased the Participation. As a result, a fund assumes the credit risk of both the borrower and the lender that is selling the Participation. A fund’s investment in loan participation interests involves the risk of insolvency of the financial intermediaries who are parties to the transactions. In the event of the insolvency of the lender selling the Participation, a fund may be treated as a general creditor of the lender and may not benefit from any offset between the lender and the borrower. Assignments typically result in a fund having a direct contractual relationship with the borrower, and a fund may enforce compliance by the borrower with the terms of the loan agreement.
Forward Commitments, When-Issued and Delayed Delivery Securities: The Fund may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. The Fund may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, the Fund may be required to pay more at settlement than the security is worth. In addition, the Fund is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, the Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, the Fund’s maximum amount of loss is the unrealized appreciation of unsettled when-issued transactions.
Commitments: Commitments are agreements to acquire an investment at a future date (subject to conditions) in connection with a potential public or non-public offering. Such agreements may obligate the Fund to make future cash payments. As of March 31, 2021, the Fund did not have any outstanding commitments.
5. | INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES |
Investment Advisory: The Fund entered into an Investment Advisory Agreement with the Manager, the Fund’s investment adviser and an indirect, wholly-owned subsidiary of BlackRock, Inc. (“BlackRock”), to provide investment advisory and administrative services. The Manager is responsible for the management of the Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of the Fund.
For such services, the Fund pays the Manager a quarterly fee at an annual rate equal to 1.75% of the Fund’s net assets determined quarterly (before the accrual of the distribution fee and the management fee for that quarter and after the accrual of any expense reimbursements owed to the Fund by the Manager pursuant to the expense limitation agreement for that quarter).
The Manager entered into a sub-advisory agreement with BlackRock Capital Investment Advisors, LLC (“BCIA”), an affiliate of the Manager. The Manager pays BCIA for services it provides for that portion of the Fund for which BCIA acts as sub-adviser, a quarterly fee that is equal to a percentage of the investment advisory fees paid by the Fund to the Manager.
Service and Distribution Fees: The Fund has entered into a Distribution Agreement (the “Distribution Agreement”) with BlackRock Investments, LLC (the “Distributor”), an affiliate of the Manager, to provide for distribution of the common shares. The Distribution Agreement provides that the Distributor will sell, and will appoint financial intermediaries to sell, common shares on behalf of the Fund on a reasonable efforts basis. The Fund has adopted a distribution and servicing plan (the “Distribution and Servicing Plan”) with respect to certain classes of the common shares and in doing so has voluntarily complied with Rule 12b-1 under the 1940 Act, as if the Fund were an open-end investment company, and will be subject to an ongoing distribution fee and/or shareholder servicing fee (together, the “Distribution and Servicing Fee”) in respect of the classes of common shares paying such Distribution and Servicing Fee. The maximum annual rates at which the Distribution and Servicing Fees may be paid under the Distribution and Servicing Plan (calculated as a percentage of the Fund’s average quarterly net assets attributable to the classes of common shares paying such Distribution and Servicing Fee) is 0.25%. Institutional Shares are not subject to a distribution fee or shareholder servicing fee.
For the period from March 1, 2021 (Class D Shares inception date) through March 31, 2021, the class specific service fees borne directly by Class D Shares was $53.
Transfer Agent: Pursuant to written agreements, certain financial intermediaries, some of which may be affiliates, provide the Fund with sub-accounting, recordkeeping, sub-transfer agency and other administrative services with respect to servicing of underlying investor accounts. For these services, these entities receive an asset-based fee or an annual fee per shareholder account, which will vary depending on share class and/or net assets. For the period ended March 31, 2021, the Fund did not pay any amounts to affiliates in return for these services.
In addition, the Fund pays the transfer agent, which is not an affiliate, a fee for the issuance, transfer and redemption of shares and the opening and maintenance of shareholder accounts, which is included in transfer agent in the Statement of Operations.
NOTESTO FINANCIAL STATEMENTS | 21 |
Notes to Financial Statements (continued)
For the period ended March 31, 2021, the following table shows the class specific transfer agent fees borne directly by each share class of the Fund:
Institutional | Class D | Total | ||||||||||
Transfer agent fees — class specific | $ | 849 | $ | 850 | $ | 1,699 |
Expense Limitations, Waivers and Reimbursements: The Manager contractually agreed to waive and/or reimburse certain operating and other expenses of the Fund in order to limit certain expenses to 0.75% of the Fund’s average quarterly value of the net assets of each share class. This expense limitation excludes the investment advisory fee, service and distribution fees, interest expense, portfolio transaction and other investment-related costs (including acquired fund fees and expenses, commitment fees on leverage, prime broker fees and dividend expense) and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business. The Manager has agreed not to reduce or discontinue the contractual expense limitations through June 30, 2023. This amount is included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the period ended March 31, 2021, the Manager waived $106,415 pursuant to this arrangement.
The Manager contractually agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through June 30, 2023. The agreement can be renewed for annual periods thereafter, and may be terminated on 90 days’ notice, each subject to approval by a majority of the Fund’s Independent Trustees. This amount is included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the period ended March 31, 2021, the Manager waived $1,384 in investment advisory fees pursuant to these arrangements.
In addition, these amounts waived and/or reimbursed by the Manager are included in transfer agent fees waived and/or reimbursed — class specific in the Statement of Operations. For the period ended March 31, 2021, class specific expense waivers and/or reimbursements are as follows:
Institutional | Class D | Total | ||||||||||
Transfer agent fees waived and/or reimbursed — class specific | $ | 849 | $ | 850 | $ | 1,699 |
With respect to the contractual expense limitation, if during the Fund’s fiscal year the operating expenses of a share class, that at any time during the prior two fiscal years received a waiver and/or reimbursement from the Manager, are less than the current expense limitation for that share class, the Manager is entitled to be reimbursed by such share class up to the lesser of: (a) the amount of fees waived and/or expenses reimbursed during those prior two fiscal years under the agreement and (b) an amount not to exceed either the current expense limitation of that share class or the expense limitation of the share class in effect at the time that the share class received the applicable waiver and/or reimbursement, provided that:
(1) | the Fund, of which the share class is a part, has more than $50 million in assets for the fiscal year, and |
(2) | the Manager or an affiliate continues to serve as the Fund’s investment adviser or administrator. |
This repayment applies only to the contractual expense limitation on net expenses and does not apply to the contractual investment advisory fee waiver described above or any voluntary waivers that may be in effect from time to time. Effective December 31, 2027, the repayment arrangement between the Fund and the Manager pursuant to which such Fund may be required to repay amounts waived and/or reimbursed under the Fund’s contractual caps on net expenses will be terminated.
As of March 31, 2021, the fund level and class specific waivers and/or reimbursements subject to possible future recoupment under the expense limitation agreement are as follows:
Fund Name | Fund Level | Institutional | Class D | |||||||||
BlackRock Private Investments Fund | $ | 106,415 | $ | 849 | $ | 850 |
Trustees and Officers: Certain trustees and/or officers of the Fund are directors and/or officers of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Fund’s Chief Compliance Officer, which is included in Trustees and Officer in the Statement of Operations.
6. | PURCHASES AND SALES |
For the period ended March 31, 2021, purchases and sales of investments including paydowns/payups, excluding short-term investments, were $42,721,065 and $4,790, respectively.
7. | INCOME TAX INFORMATION |
It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required. The Fund’s initial tax year is September 30, 2021.
The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for a period of three fiscal years after they are filed. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.
Management has analyzed tax laws and regulations and their application to the Fund as of March 31, 2021, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.
22 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Notes to Financial Statements (continued)
As of March 31, 2021, gross unrealized appreciation and depreciation based on cost of investments (including short positions and derivatives, if any) for U.S. federal income tax purposes were as follows:
Fund Name | Tax Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation (Depreciation) | ||||||||||||
BlackRock Private Investments Fund | $ | 65,865,063 | $ | 22,319 | $ | (212,295 | ) | $ | (189,976 | ) | ||||||
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8. | PRINCIPAL RISKS |
In the normal course of business, the Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate and price fluctuations. Local, regional or global events such as war, acts of terrorism, the spread of infectious illness or other public health issues, recessions, or other events could have a significant impact on the Fund and its investments. The Fund’s prospectus provides details of the risks to which the Fund is subject.
The Fund may invest without limitation in illiquid or less liquid investments or investments in which no secondary market is readily available or which are otherwise illiquid, including private placement securities. The Fund may not be able to readily dispose of such investments at prices that approximate those at which the Fund could sell such investments if they were more widely traded and, as a result of such illiquidity, the Fund may have to sell other investments or engage in borrowing transactions if necessary to raise funds to meet its obligations. Limited liquidity can also affect the market price of investments, thereby adversely affecting the Fund’s net asset value and ability to make dividend distributions. Privately issued debt securities are often of below investment grade quality, frequently are unrated and present many of the same risks as investing in below investment grade public debt securities.
Market Risk: The Fund may be exposed to prepayment risk, which is the risk that borrowers may exercise their option to prepay principal earlier than scheduled during periods of declining interest rates, which would force the Fund to reinvest in lower yielding securities. The Fund may also be exposed to reinvestment risk, which is the risk that income from the Fund’s portfolio will decline if the Fund invests the proceeds from matured, traded or called fixed-income securities at market interest rates that are below the Fund portfolio’s current earnings rate.
An outbreak of respiratory disease caused by a novel coronavirus has developed into a global pandemic and has resulted in closing borders, quarantines, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other global health crises that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. This pandemic may result in substantial market volatility and may adversely impact the prices and liquidity of a fund’s investments. The duration of this pandemic and its effects cannot be determined with certainty.
Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. The Fund may invest in illiquid investments. An illiquid investment is any investment that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. The Fund may experience difficulty in selling illiquid investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause the Fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of the Fund may lose value, regardless of the individual results of the securities and other instruments in which the Fund invests.
The price the Fund could receive upon the sale of any particular portfolio investment may differ from the Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of operations. As a result, the price received upon the sale of an investment may be less than the value ascribed by the Fund, and the Fund could realize a greater than expected loss or lesser than expected gain upon the sale of the investment. The Fund’s ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third party service providers.
Counterparty Credit Risk: The Fund may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions, including making timely interest and/or principal payments or otherwise honoring its obligations. The Fund manages counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.
Concentration Risk: A diversified portfolio, where this is appropriate and consistent with a fund’s objectives, minimizes the risk that a price change of a particular investment will have a material impact on the NAV of a fund. The investment concentrations within the Fund’s portfolio are disclosed in its Schedule of Investments.
The Fund invests a significant portion of its assets in fixed-income securities and/or uses derivatives tied to the fixed-income markets. Changes in market interest rates or economic conditions may affect the value and/or liquidity of such investments. Interest rate risk is the risk that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as interest rates rise. The Fund may be subject to a greater risk of rising interest rates due to the current period of historically low rates.
NOTESTO FINANCIAL STATEMENTS | 23 |
Notes to Financial Statements (continued)
LIBOR Transition Risk: The United Kingdom’s Financial Conduct Authority announced a phase out of the London Interbank Offered Rate (“LIBOR”). Although many LIBOR rates will be phased out by the end of 2021, a selection of widely used USD LIBOR rates will continue to be published through June 2023 in order to assist with the transition. The Fund may be exposed to financial instruments tied to LIBOR to determine payment obligations, financing terms, hedging strategies or investment value. The transition process away from LIBOR might lead to increased volatility and illiquidity in markets for, and reduce the effectiveness of new hedges placed against, instruments whose terms currently include LIBOR. The ultimate effect of the LIBOR transition process on the Fund is uncertain.
9. | CAPITAL SHARE TRANSACTIONS |
The Fund is authorized to issue an unlimited number of shares, all of which were initially classified as Common Shares. The par value for the Fund’s Common Shares is $0.001.
For the periods shown, shares issued and outstanding increased by the following amounts:
Period Ended 03/31/21 | ||||||||
Fund Name / Share Class | Shares | Amounts | ||||||
BlackRock Private Investments Fund | ||||||||
Institutional(a) | ||||||||
Shares issued from Initial Public Offering | 4,975,000 | $ | 49,750,000 | |||||
Class D(a) | ||||||||
Shares issued from Initial Public Offering | 25,000 | $ | 250,000 | |||||
|
|
|
| |||||
5,000,000 | $ | 50,000,000 | ||||||
|
|
|
|
(a) | The share class commenced operation on March 1, 2021. |
Beginning after the first two years of operations, the Fund intends, but is not obligated, to conduct quarterly tender offers in the sole discretion of its Board until it adopts a plan of liquidation. It is expected that, under normal market circumstances, the Manager generally will recommend to the Board, subject to the Board’s discretion, that any such tender offer would be for an amount that is not more than 5% of the Fund’s net asset value, although any particular recommendation may exceed that percentage. In a tender offer, the Fund repurchases outstanding common shares at its net asset value on the valuation date for the tender offer. In any given year, the Advisor may or may not recommend to the Board that the Fund conduct tender offers. Accordingly, there may be years in which no tender offer is made. Therefore, common shares will not be redeemable at an investor’s option nor will they be exchangeable for shares of any other trust.
As of March 31, 2021, shares owned by BlackRock Financial Management, Inc., an affiliate of the Fund, were as follows:
Fund Name | Institutional | Class D | Total | |||||||||
BlackRock Private Investments Fund | 4,975,000 | 25,000 | 5,000,000 |
10. | SUBSEQUENT EVENTS |
Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.
24 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of
BlackRock Private Investments Fund:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of BlackRock Private Investments Fund (the “Fund”), including the schedule of investments, as of March 31, 2021, the related statements of operations, changes in net assets, and the financial highlights for the period from March 1, 2021 (commencement of operations) through March 31, 2021, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of March 31, 2021, and the results of its operations, the changes in its net assets, and the financial highlights for the period from March 1, 2021 (commencement of operations) through March 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2021, by correspondence with the custodian, agent banks, and brokers; when replies were not received from agent banks and brokers, we performed other auditing procedures. We believe that our audit provides a reasonable basis for our opinion.
Deloitte & Touche LLP
Boston, Massachusetts
May 21, 2021
We have served as the auditor of one or more BlackRock investment companies since 1992.
REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 25 |
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement
The Board of Trustees (the “Board,” the members of which are referred to as “Board Members”) of BlackRock Private Investments Fund (the “Fund”) met on December 18, 2020 (the “Meeting”) to consider the approval of the proposed investment advisory agreement (the “Advisory Agreement”) between the Fund and BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor. The Board also considered the initial approval of the proposed sub-advisory agreement (the “Sub-Advisory Agreement”) among the Fund, the Manager and BlackRock Capital Investment Advisors, LLC (the “Sub-Advisor”). The Manager and the Sub-Advisor are referred to herein as “BlackRock.” The Advisory Agreement and the Sub-Advisory Agreement are referred to herein as the “Agreements.”
Activities and Composition of the Board
On the date of the Meeting, the Board consisted of four individuals, three of whom were not “interested persons” of the Fund as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Fund and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chair of the Board is an Independent Board Member. The Board has established an Audit Committee, a Governance and Nominating Committee, a Compliance Committee and a Performance Oversight Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members.
The Agreements
Pursuant to the 1940 Act, the Board is required to consider the initial approval of the Agreements. In connection with this process, the Board assessed, among other things, the nature, extent and quality of the services to be provided to the Fund by BlackRock, BlackRock’s personnel and affiliates, including (as applicable): investment management services; accounting oversight; administrative and shareholder services; oversight of the Fund’s service providers; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements.
Board Considerations in Approving the Agreements
The Approval Process: At the Meeting, the Board reviewed materials relating to its consideration of the Agreements. The Board considered all factors it believed relevant with respect to the Fund, including, among other factors: (a) the nature, extent and quality of the services to be provided by BlackRock; (b) the investment performance of BlackRock portfolio management; (c) the advisory fee and the estimated cost of the services to be provided and profits to be realized by BlackRock and its affiliates from their relationship with the Fund; (d) the sharing of potential economies of scale; (e) potential fall-out benefits to BlackRock and BlackRock’s affiliates as a result of its relationship with the Fund; (f) the policies and practices of BlackRock with respect to portfolio transactions for the Fund; and (g) other factors deemed relevant by the Board Members.
In determining whether to approve the Agreements, the Board met with the relevant investment advisory personnel from BlackRock and considered all information it deemed reasonably necessary to evaluate the terms of the Agreements. The Board received materials in advance of the Meeting relating to its consideration of the Agreements, including, among other things, (a) fees and estimated expense ratios of the Fund in comparison to the fees and expense ratios of a peer group of funds as determined by Broadridge Financial Solutions, Inc. (“Broadridge”) and other metrics, as applicable; (b) information on the composition of the peer group of funds and a description of Broadridge’s methodology; (c) information regarding BlackRock’s economic outlook for the Fund and its general investment outlook for the markets; (d) information regarding fees paid to service providers that are affiliates of BlackRock; and (e) information outlining the legal duties of the Board under the 1940 Act with respect to the consideration and approval of the Agreements. The Board also noted information received at prior Board meetings concerning compliance records and regulatory matters relating to BlackRock.
The Board also considered other matters it deemed important to the approval process, such as other payments to be made to BlackRock or its affiliates relating to securities lending and cash management, and BlackRock’s services related to the valuation and pricing of Fund portfolio holdings, and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock’s personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as determinative, and each Board Member may have attributed different weights to the various items considered.
A. Nature, Extent and Quality of the Services to be Provided by BlackRock
The Board, including the Independent Board Members, reviewed the nature, extent and quality of services to be provided by BlackRock, including the investment advisory services to be provided to the Fund. The Board received information concerning the investment philosophy and investment process to be used by BlackRock in managing the Fund, as well as a description of the capabilities, personnel and services of BlackRock. In connection with this review, the Board considered BlackRock’s in-house research capabilities as well as other resources available to its personnel. The Board considered the scope of the services to be provided by BlackRock to the Fund under the Agreements relative to services typically provided by third parties to other funds. The Board noted that the standard of care applicable under the Agreements was comparable to that found generally in investment company advisory agreements. The Board concluded that the scope of BlackRock’s services to be provided to the Fund was consistent with the Fund’s operational requirements, including, in addition to seeking to meet its investment objective, compliance with investment restrictions, tax and reporting requirements and related shareholder services.
The Board, including the Independent Board Members, also considered the quality of the administrative and other non-investment advisory services to be provided by BlackRock and its affiliates to the Fund. The Board evaluated the procedures of BlackRock designed to fulfill its fiduciary duty to the Fund with respect to possible conflicts of interest, including BlackRock’s code of ethics (regulating the personal trading of BlackRock’s officers and employees), the procedures by which BlackRock allocates trades among its various investment advisory clients, the integrity of the systems in place to ensure compliance with the foregoing and the record of BlackRock in these matters. The Board also noted information received at prior meetings of the boards of directors/trustees of other funds in the BlackRock Fixed-Income Complex concerning the standards of BlackRock with respect to the execution of portfolio transactions.
The Board, including the Independent Board Members, considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and the Fund’s portfolio management team; BlackRock’s research capabilities; the history of investments by portfolio managers in the funds they manage; portfolio trading capabilities; use of technology; commitment to compliance; credit analysis capabilities; risk analysis and oversight capabilities; and the approach to training
26 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (continued)
and retaining portfolio managers and other research, advisory and management personnel. The Board also considered BlackRock’s overall risk management program, including the continued efforts of BlackRock and its affiliates to address cybersecurity risks and the role of BlackRock’s Risk & Quantitative Analysis Group. The Board engaged in a review of BlackRock’s compensation structure with respect to the Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives. The Board also considered the business reputation of BlackRock and its financial resources and concluded that BlackRock would be able to meet any reasonably foreseeable obligation under the Agreements.
In addition to investment advisory services, the Board, including the Independent Board Members, considered the nature and quality of the administrative and other non-investment advisory services to be provided by BlackRock and its affiliates to the Fund. The Board noted that BlackRock and its affiliates will provide the Fund with certain administrative, shareholder and other services (in addition to any such services provided to the Fund by third parties) and officers and other personnel as are necessary for the operations of the Fund. In particular, the Board noted that BlackRock and its affiliates will provide the Fund with administrative services including, among others: (i) responsibility for disclosure documents, such as the prospectus and the statement of additional information in connection with the Fund’s public offering and periodic shareholder reports; (ii) oversight of accounting and pricing; (iii) responsibility for periodic filings with regulators and self-regulatory organizations; (iv) overseeing and coordinating the activities of third-party service providers including, among others, the Fund’s custodian, fund accountant, transfer agent, and auditor; (v) organizing Board meetings and preparing the materials for such Board meetings; (vi) providing legal and compliance support; (vii) furnishing analytical and other support to assist the Board in its consideration of strategic issues; and (viii) performing or managing administrative functions necessary for the operation of the Fund, such as tax reporting, expense management, fulfilling regulatory filing requirements and shareholder call center and other services. The Board reviewed the structure and duties of BlackRock’s fund administration, shareholder services, and legal & compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.
B. The Investment Performance of the Fund and BlackRock
In their capacity as members of the boards of directors or trustees of certain other BlackRock-advised funds, the Board, including the Independent Board Members, previously received and considered information about BlackRock’s investment performance for other funds. The Board, while recognizing that past performance is not predictive of future results, also reviewed the historical track record of the BlackRock Private Equity Partners portfolio management team (“PEP”) with respect to commingled private investment funds managed by PEP. The Board, however, could not consider the performance history of the Fund because the Fund had not yet commenced operations as of the date of the Meeting.
C. Consideration of the Advisory/Management Fees and the Estimated Cost of the Services to be Provided and Estimated Profits to be Realized by BlackRock and its Affiliates from Their Relationship with the Fund
In connection with the initial approval of the Agreements, the Board, including the Independent Board Members, reviewed the Fund’s proposed contractual management fee rate compared with the other funds in its Broadridge category. The contractual management fee rate represents a combination of the advisory fee and any administrative fees, before taking into account any reimbursements or fee waivers. In addition, the Board, including the Independent Board Members, considered the Fund’s estimated total net expense ratio, as well as the actual management fee rate as a percentage of total assets, to those of other funds in its Broadridge category. The estimated total expense ratio represents a fund’s total net operating expenses, excluding any investment related expenses. The estimated total expense ratio gives effect to any expense reimbursements or fee waivers that benefit a fund, and the actual management fee rate gives effect to any management fee reimbursements or waivers that benefit a fund. The Board considered the services provided and the fees charged by BlackRock and its affiliates to other types of clients with similar investment mandates, as applicable.
The Board considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreements and to provide the high quality of services that is expected by the Board. The Board further considered factors including but not limited to BlackRock’s commitment of time, assumption of risk, and liability profile in servicing the Fund in contrast to what is required of BlackRock with respect to other products across the open-end fund, closed-end fund, sub-advised mutual fund, collective investment Fund and institutional separate account product channels, as applicable.
The Board discussed the Fund’s contractual management fee. The Board then acknowledged that, pursuant to the Fee Waiver Agreement, BlackRock has offered to contractually waive the management fee with respect to any portion of the Fund’s assets estimated to be attributable to investments in any equity and fixed-income mutual funds and exchange-traded funds managed by BlackRock or its affiliates that have a contractual management fee and further to waive the management fee by the amount of management fees the Fund pays to BlackRock or its affiliates indirectly through its investment in money market funds advised by BlackRock or its affiliates. The Board further acknowledged that BlackRock, and not the Fund, expects to pay a sub-advisory fee to the Sub-Advisor. The Board noted that the Fund’s contractual management fee rate ranked in the fourth quartile and the Fund’s estimated actual management fee rate and estimated total expense ratio ranked in the fourth quartile and third quartile, respectively, relative to the Broadridge-selected peer group. The Board noted that, due to the lack of non-leveraged hybrid peer funds, leveraged interval hybrid closed-end funds were considered for inclusion in the Broadridge-selected peer group. The Board also noted that the Fund is differentiated from the Broadridge-selected peers given its significant exposure to private equity securities. The Board noted the Fund’s contractual management fee ranked in the fourth quartile and total expense ratio ranked in the third quartile relative to those of the funds included in a supplemental peer group consisting of five other unlisted closed-end funds employing similar investment strategies. The Board then acknowledged that, pursuant to the Expense Limitation Agreement, BlackRock has agreed to cap most non-management and non-distribution and servicing fee expenses of each share class of the Fund at 0.75% of the average quarterly value of the net assets of each share class.
Following consideration of this information, the Board, including the Independent Board Members, concluded that the fees to be paid pursuant to the Agreements were fair and reasonable in light of the services to be provided.
As the Fund has not commenced operations as of the date of the Meeting, BlackRock was not able to provide the Board with specific information concerning the expected profits to be realized by BlackRock and its affiliates from their relationships with the Fund. BlackRock, however, will provide the Board with such information at future meetings.
DISCLOSURE OF INVESTMENT ADVISORY AGREEMENT AND SUB-ADVISORY AGREEMENT | 27 |
Disclosure of Investment Advisory Agreement and Sub-Advisory Agreement (continued)
D. Economies of Scale
The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of the Fund increase. The Board also considered the extent to which the Fund may benefit from such economies of scale in a variety of ways, and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable the Fund to more fully participate in these economies of scale.
The Board noted that unlike most closed-end funds that generally do not experience substantial growth after the initial public offering, the Fund’s shares will be continuously offered, and the Fund would have the potential for growth beyond initial projections used in establishing the Fund’s fee structure. The Board noted that it would consider the realization of economies of scale as the Fund grows and in subsequent Board meetings.
E. Other Factors Deemed Relevant by the Board Members
The Board, including the Independent Board Members, also took into account other potential ancillary or “fall-out” benefits that BlackRock or its affiliates may derive from BlackRock’s respective relationships with the Fund, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Fund, including for administrative, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that, subject to applicable law, BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts.
In connection with its consideration of the Agreements, the Board also received information regarding BlackRock’s brokerage and soft dollar practices. The Board received reports from BlackRock which included information on brokerage commissions and trade execution practices for BlackRock closed-end funds throughout the year.
The Board also considered the various notable initiatives and projects BlackRock performed in connection with its closed-end fund product line. These initiatives included ongoing services to manage leverage that has become increasingly complex and continued communications efforts with shareholders, fund analysts and financial advisers. BlackRock’s shareholder and analyst outreach services included, among other things: sponsoring and participating in conferences; communicating with closed-end fund analysts covering the BlackRock funds throughout the year; providing marketing and product updates for the closed-end funds; and maintaining and enhancing its closed-end fund website.
The Board, including all of the Independent Board Members, concluded that these potential ancillary benefits that BlackRock and its affiliates could receive with regard to providing investment advisory and other services to the Fund were consistent with those generally available to other fund sponsors.
Conclusion
The Board, including all the Independent Board Members, approved the Investment Management Agreement between BlackRock and the Fund, for a two-year term beginning on the effective date of the Investment Management Agreement and the Sub-Advisory Agreement among BlackRock, the Sub-Advisor and the Fund, for a two-year term beginning on the effective date of the Sub-Advisory Agreement. Based upon its evaluation of all of the aforementioned factors in their totality, as well as other information, the Board, including the Independent Board Members, was satisfied that the terms of the Agreements were fair and reasonable and in the best interest of the Fund and its shareholders. In arriving at its decision to approve the Agreements, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination.
28 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Automatic Dividend Reinvestment Plan
Pursuant to the Fund’s dividend reinvestment plan (the “Reinvestment Plan”), registered shareholders will have all dividends, including any capital gain dividends, reinvested automatically in additional Shares of the Fund by State Street Bank and Trust Company (the “Reinvestment Plan Agent”), unless the shareholder elects to receive cash. Shareholders who elect not to participate in the Reinvestment Plan will receive all dividends in cash paid directly to the shareholder of record (or, if the Shares are held through banks, brokers or other nominee name, then to such banks, brokers or other nominee) by State Street Bank and Trust Company, as dividend disbursing agent. You may elect not to participate in the Reinvestment Plan and to receive all dividends in cash by contacting your bank, broker or other nominee who holds your Fund common shares or if your Fund common shares are held directly by the Fund, by contacting the Reinvestment Plan Agent, at the address set forth below. Participation in the Reinvestment Plan is completely voluntary and may be terminated or resumed at any time without penalty by written notice if received and processed by the Reinvestment Plan Agent prior to the dividend record date. Additionally, the Reinvestment Plan Agent seeks to process notices received after the record date but prior to the payable date and such notices often will become effective by the payable date. Where late notices are not processed by the applicable payable date, such termination or resumption will be effective with respect to any subsequently declared dividend.
In the case of record shareholders such as banks, brokers or other nominees that hold Fund common shares for others who are the beneficial owners, the Reinvestment Plan Agent will administer the Reinvestment Plan on the basis of the number of Shares certified from time to time by the record shareholder as representing the total amount registered in such shareholder’s name and held for the account of beneficial owners who are to participate in the Reinvestment Plan. Shareholders whose Shares are held in the name of a bank, broker or other nominee should contact the bank, broker or other nominee for details. Such shareholders may not be able to transfer their shares to another bank, broker or other nominee and continue to participate in the Reinvestment Plan.
The number of newly issued Shares to be credited to each participant’s account will be determined by dividing the dollar amount of the dividend by the net asset value per share on the reinvestment date; there is no sales or other charge for reinvestment.
The Reinvestment Plan Agent’s fees for the handling of the reinvestment of dividends will be paid by the Fund. The Fund reserves the right to amend or terminate the Reinvestment Plan. There is no direct service charge to participants with regard to newly issued Shares in the Reinvestment Plan. Notice of amendments to the Reinvestment Plan will be sent to participants.
All correspondence concerning the Reinvestment Plan should be directed to the Reinvestment Plan Agent, in writing to: BlackRock Private Investments Fund c/o State Street Bank and Trust Company, 1 Heritage Drive, North Quincy, MA 02171.
AUTOMATIC DIVIDEND REINVESTMENT PLAN | 29 |
Trustee and Officer Information
Independent Trustees(a) | ||||||||
Name Year of Birth(b) | Position(s) Held (Length of Service)(c) | Principal Occupation(s) During Past Five Years | Number of BlackRock-Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen | Public Company and Other Investment Company Directorships Held During Past Five Years | ||||
W. Carl Kester 1951 | Chair of the Board and Trustee (Since 2020) | George Fisher Baker Jr. Professor of Business Administration, Harvard Business School since 2008; Deputy Dean for Academic Affairs from 2006 to 2010; Chairman of the Finance Unit, from 2005 to 2006; Senior Associate Dean and Chairman of the MBA Program from 1999 to 2005; Member of the faculty of Harvard Business School since 1981. | 85 RICs consisting of 110 Portfolios | None | ||||
Frank J. Fabozzi 1948 | Trustee (Since 2020) | Editor of The Journal of Portfolio Management since 1986; Professor of Finance, EDHEC Business School (France) since 2011; Visiting Professor, Princeton University for the 2013 to 2014 academic year and Spring 2017 semester; Professor in the Practice of Finance, Yale University School of Management from 1994 to 2011 and currently a Teaching Fellow in Yale’s Executive Programs; Board Member, BlackRock Equity-Liquidity Funds from 2014 to 2016; affiliated professor Karlsruhe Institute of Technology from 2008 to 2011; Visiting Professor, Rutgers University for the Spring 2019 semester; Visiting Professor, New York University for the 2019 academic year. Adjunct Professor of Finance, Carnegie Mellon University in fall 2020 semester. | 85 RICs consisting of 110 Portfolios | None | ||||
Catherine A. Lynch 1961 | Trustee (Since 2020) | Chief Executive Officer, Chief Investment Officer and various other positions, National Railroad Retirement Investment Trust from 2003 to 2016; Associate Vice President for Treasury Management, The George Washington University from 1999 to 2003; Assistant Treasurer, Episcopal Church of America from 1995 to 1999. | 85 RICs consisting of 110 Portfolios | None | ||||
Interested Trustees(d) | ||||||||
Name Year of Birth(b) | Position(s) Held (Length of Service)(c) | Principal Occupation(s) During Past Five Years | Number of BlackRock-Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen | Public Company and Other Investment Company Directorships Held During Past Five Years | ||||
John M. Perlowski 1964 | Trustee (Since 2020) and President and Chief Executive Officer (Since 2020) | Managing Director of BlackRock, Inc. since 2009; Head of BlackRock Global Accounting and Product Services since 2009; Advisory Director of Family Resource Network (charitable foundation) since 2009. | 115 RICs consisting of 260 Portfolios | None | ||||
(a) The address of each Trustee is c/o BlackRock, Inc., 55 East 52nd Street, New York, New York 10055. | ||||||||
(b) Each Independent Trustee holds office until his or her successor is duly elected and qualifies or until his or her earlier death, resignation, retirement or removal as provided by the Fund’s by-laws or charter or statute, or until December 31 of the year in which he or she turns 75. Trustees who are “interested persons,” as defined in the Investment Company Act (“1940 Act”) serve until their successor is duly elected and qualifies or until their earlier death, resignation, retirement or removal as provided by the Fund’s by-laws or statute, or until December 31 of the year in which they turn 72. The Board may determine to extend the terms of Independent Trustees on a case-by-case basis, as appropriate. | ||||||||
(c) Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. Certain Independent Trustees first became members of the boards of other legacy MLIM or legacy BlackRock funds as follows: Frank J. Fabozzi, 1988; and W. Carl Kester, 1995. Certain other Independent Trustees became members of the boards of the close-end funds in the BlackRock Fixed-Income Complex as follows: Catherine A. Lynch, 2016. | ||||||||
(d) Mr. Perlowski is an “interested persons,” as defined in the 1940 Act, of the Fund based on his position with BlackRock, Inc. and its affiliates. Mr. Perlowski is also board members of the BlackRock Multi-Asset Complex. |
30 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Trustee and Officer Information (continued)
Officers Who Are Not Trustees(a) | ||||
Name Year of Birth(b) | Position(s) Held (Length of Service) | Principal Occupation(s) During Past Five Years | ||
Jonathan Diorio 1980 | Vice President (Since 2020) | Managing Director of BlackRock, Inc. since 2015; Director of BlackRock, Inc. from 2011 to 2015. | ||
Trent Walker 1974 | Chief Financial Officer (Since 2021) | Managing Director of BlackRock, Inc. since September 2019; Executive Vice President of PIMCO from 2016 to 2019; Senior Vice President of PIMCO from 2008 to 2015; Treasurer from 2013 to 2019 and Assistant Treasurer from 2007 to 2017 of PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, 2 PIMCO-sponsored interval funds and 21 PIMCO-sponsored closed-end funds. | ||
Jay M. Fife 1970 | Treasurer (Since 2020) | Managing Director of BlackRock, Inc. since 2007. | ||
Charles Park 1967 | Chief Compliance Officer (Since 2020) | Anti-Money Laundering Compliance Officer for certain BlackRock-advised Funds from 2014 to 2015; Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the BlackRock Multi-Asset Complex and the BlackRock Fixed-Income Complex since 2014; Principal of and Chief Compliance Officer for iShares® Delaware Trust Sponsor LLC since 2012 and BlackRock Fund Advisors (“BFA”) since 2006; Chief Compliance Officer for the BFA-advised iShares® exchange traded funds since 2006; Chief Compliance Officer for BlackRock Asset Management International Inc. since 2012. | ||
Lisa Belle 1968 | Anti-Money Laundering Compliance Officer (Since 2020) | Managing Director of BlackRock, Inc. since 2019; Global Financial Crime Head for Asset and Wealth Management of JP Morgan from 2013 to 2019; Managing Director of RBS Securities from 2012 to 2013; Head of Financial Crimes for Barclays Wealth Americas from 2010 to 2012. | ||
Janey Ahn 1975 | Secretary (Since 2020) | Managing Director of BlackRock, Inc. since 2018; Director of BlackRock, Inc. from 2009 to 2017. | ||
(a) The address of each Officer is c/o BlackRock, Inc., 55 East 52nd Street, New York, New York 10055. (b) Officers of the Fund serve at the pleasure of the Board. |
Further information about the Fund’s Trustees and Officers is available in the Fund’s Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762.
TRUSTEEAND OFFICER INFORMATION | 31 |
General Information
The Fund’s Statement of Additional Information includes additional information about its Board and is available, without charge upon request by calling (800) 882-0052.
The following information is a summary of certain changes since the Fund’s inception. This information may not reflect all of the changes that have occurred since you purchased the Fund.
Except if noted otherwise herein, there were no changes to the Fund’s charters or by-laws that would delay or prevent a change of control of the Fund that were not approved by the shareholders. Except if noted otherwise herein, there have been no changes in the persons who are primarily responsible for the day-to-day management of the Fund’s portfolios.
In accordance with Section 23(c) of the Investment Company Act of 1940, the Fund may from time to time purchase shares of its common stock in the open market or in private transactions.
Quarterly performance, semi-annual and annual reports, current net asset value and other information regarding the Fund may be found on BlackRock’s website, which can be accessed at blackrock.com. Any reference to BlackRock’s website in this report is intended to allow investors public access to information regarding the Fund and does not, and is not intended to, incorporate BlackRock’s website in this report.
Electronic Delivery
Shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual shareholder reports and prospectuses by enrolling in the electronic delivery program. Electronic copies of shareholder reports and prospectuses are available on BlackRock’s website.
To enroll in electronic delivery:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial adviser. Please note that not all investment advisers, banks or brokerages may offer this service.
Householding
The Fund will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports, Rule 30e-3 notices and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Fund at (800) 882-0052.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT is available on the SEC’s website at sec.gov. Additionally, the Fund makes its portfolio holdings for the first and third quarters of each fiscal year available at blackrock.com/fundreports.
Availability of Proxy Voting Policies, Procedures and Voting Records
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to securities held in the Fund’s portfolios during the most recent 12-month period ended June 30 is available without charge, upon request (1) by calling (800) 882-0052; (2) on the BlackRock website at blackrock.com; and (3) on the SEC’s website at sec.gov.
Availability of Fund Updates
BlackRock will update performance and certain other data for the Fund on a monthly basis on its website in the “Closed-end Funds” section of blackrock.com as well as certain other material information as necessary from time to time. Investors and others are advised to check the website for updated performance information and the release of other material information about the Fund. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Fund and does not, and is not intended to, incorporate BlackRock’s website in this report.
Fundamental Periodic Repurchase Policy
The Fund has adopted an “interval fund” structure pursuant to Rule 23c-3 under the 1940 Act as a fundamental policy. As an interval fund, the Fund will make quarterly repurchase offers at net asset value (less a repurchase fee not to exceed 2%) to all Fund shareholders. The percentage of outstanding shares that the Fund can repurchase in each offer will be established by the Fund’s Board shortly before the commencement of each offer, and in an amount that is not more than 5% of the Fund’s net asset value.
32 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Additional Information (continued)
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.
If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.
Fund and Service Providers
Investment Adviser
BlackRock Advisors, LLC
Wilmington, DE 19809
Sub-Adviser
BlackRock Capital Investment Advisors, LLC
Wilmington, DE 19809
Administrator, Custodian and Transfer Agent
State Street Bank and Trust Company
Boston, MA 02111
Distributor
BlackRock Investments, LLC
New York, NY 10022
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Boston, MA 02116
Legal Counsel
Willkie Farr & Gallagher LLP
New York, NY 10019
Address of the Fund
100 Bellevue Parkway
Wilmington, DE 19809
ADDITIONAL INFORMATION | 33 |
Glossary of Terms Used in this Report
Portfolio Abbreviation | ||
CLO | Collateralized Loan Obligation | |
LIBOR | London Interbank Offered Rate | |
MSCI | Morgan Stanley Capital International |
34 | 2021 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS |
Want to know more?
blackrock.com | 888-204-3956
This report is intended for current holders. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of the Fund unless preceded or accompanied by the Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that shares, if repurchased by the Fund in connection with any applicable tender offer, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
BPIF-03/21-AR
(b) Not Applicable
Item 3 – | Audit Committee Financial Expert – The registrant’s board of directors (the “board of directors”), has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent: |
Frank J. Fabozzi
Catherine A. Lynch
Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.
Item 4 – | Principal Accountant Fees and Services |
The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:
(a) Audit Fees | (b) Audit-Related Fees1 | (c) Tax Fees2 | (d) All Other Fees | |||||||||||||
Entity Name | Current Fiscal Year End | Previous Fiscal Year End | Current Fiscal Year End | Previous Fiscal Year End | Current Fiscal Year End | Previous Fiscal Year End | Current Fiscal Year End | Previous Fiscal Year End | ||||||||
BlackRock Private Investments Fund | $64,337 | N/A | $8,500 | $0 | $50,000 | N/A | $0 | N/A |
The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors LLC (“Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Affiliated Service Providers”):
2
Current Fiscal Year End | Previous Fiscal��Year End | |||
(b) Audit-Related Fees1 | $0 | $0 | ||
(c) Tax Fees2 | $0 | $0 | ||
(d) All Other Fees4 | $2,032,000 | $1,984,000 |
1 The nature of the services includes assurance and related services reasonably related to the performance of the audit or review of financial statements not included in Audit Fees, including accounting consultations, agreed-upon procedure reports, attestation reports, comfort letters, out-of-pocket expenses and internal control reviews not required by regulators.
2 The nature of the services includes tax compliance and/or tax preparation, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews, taxable income and tax distribution calculations.
3 Includes fees for the Fund and the Fund’s subsidiary.
4 Non-audit fees of $2,032,000 and $1,984,000 for the current fiscal year and previous fiscal year, respectively, were paid to the Fund’s principal accountant in their entirety by BlackRock, in connection with services provided to the Affiliated Service Providers of the Fund and of certain other funds sponsored and advised by BlackRock or its affiliates for a service organization review and an accounting research tool subscription. These amounts represent aggregate fees paid by BlackRock and were not allocated on a per fund basis.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The Committee has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the Investment Adviser and Affiliated Service Providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are (a) consistent with the SEC’s auditor independence rules and (b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.
Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g., unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels.
(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable
3
(g) The aggregate non-audit fees, defined as the sum of the fees shown under “Audit-Related Fees,” “Tax Fees” and “All Other Fees,” paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Affiliated Service Providers were:
Entity Name | Current Fiscal Year End | Previous Fiscal Year End | ||||
BlackRock Private Investments Fund | $58,500 | N/A |
Additionally, the amounts billed by D&T in connection with services provided to the Affiliated Service Providers of the Fund and of other funds sponsored or advised by BlackRock or its affiliates during the current and previous fiscal years for a service organization review and an accounting research tool subscription were:
Current Fiscal Year End | Previous Fiscal Year End | |
$2,032,000 | $1,984,000 |
These amounts represent aggregate fees paid by BlackRock and were not allocated on a per fund basis.
(h) The Committee has considered and determined that the provision of non-audit services that were rendered to the Investment Adviser, and the Affiliated Service Providers that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
Item 5 – | Audit Committee of Listed Registrant |
(a) Not Applicable
(b) Not Applicable
Item 6 – | Investments |
(a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this Form.
(b) Not Applicable
Item 7 – | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – The board of directors has delegated the voting of proxies for the Fund’s portfolio securities to the Investment Adviser pursuant to the Investment Adviser’s proxy voting guidelines. Under these guidelines, the Investment Adviser will vote proxies related to Fund securities in the best interests of the Fund and its stockholders. From time to time, a vote may present a conflict between the interests of the Fund’s stockholders, on the one hand, and those of the Investment Adviser, or any affiliated person of the Fund or the Investment Adviser, on the other. In such event, provided that the Investment Adviser’s Equity Investment Policy Oversight Committee, or a sub-committee thereof (the “Oversight Committee”) is aware of the real or potential conflict or material non-routine matter and if the Oversight Committee does not reasonably believe it is able to follow its general voting guidelines (or if the particular proxy matter is not addressed in the guidelines) and |
4
vote impartially, the Oversight Committee may retain an independent fiduciary to advise the Oversight Committee on how to vote or to cast votes on behalf of the Investment Adviser’s clients. If the Investment Adviser determines not to retain an independent fiduciary, or does not desire to follow the advice of such independent fiduciary, the Oversight Committee shall determine how to vote the proxy after consulting with the Investment Adviser’s Portfolio Management Group and/or the Investment Adviser’s Legal and Compliance Department and concluding that the vote cast is in its client’s best interest notwithstanding the conflict. A copy of the Fund’s Proxy Voting Policy and Procedures are attached as Exhibit 99.PROXYPOL, a copy of the Fund’s Global Corporate Governance & Engagement Principles are attached as Exhibit 99.GLOBAL.CORP.GOV and a copy of the Fund’s Corporate Governance and Proxy Voting Guidelines for U.S. Securities are attached as Exhibit 99.US.CORP.GOV. Information on how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, (i) at www.blackrock.com and (ii) on the SEC’s website at http://www.sec.gov. |
Item 8 – | Portfolio Managers of Closed-End Management Investment Companies |
(a)(1) As of the date of filing this Report:
The registrant is managed by a team of investment professionals comprised of Stephen Kelly, Managing Director at BlackRock, Jonathan Seeg, Managing Director at BlackRock, Joseph Auriemma, Managing Director at BlackRock, James Keenan, Managing Director at BlackRock, and Jeffrey Cucunato, Managing Director at BlackRock. Messrs. Kelly, Seeg, Auriemma, Keenan and Cucunato are the Fund’s co-portfolio managers and are responsible for the day-to-day management of the Fund’s portfolio and the selection of its investments. Messrs. Kelly, Seeg, Auriemma, Keenan and Cucunato have been members of the Fund’s management team since 2021.
Portfolio Manager | Biography | |
Stephen Kelly | Managing Director of BlackRock, Inc. since 2006 and Global Head of Business Operations for BlackRock Private Equity Partners (“PEP”) from 2016 to 2020. | |
Jonathan Seeg | Managing Director of BlackRock, Inc. since 2012 and Global Head of Client Solutions and Strategy for PEP. | |
Joseph Auriemma | Managing Director of BlackRock, Inc. since 2011 and Global Head of Information Management for PEP from 2016 to 2020. | |
James Keenan | Managing Director of BlackRock since 2008 and Head of the Leveraged Finance Portfolio team; Director of BlackRock from 2006 to 2007. | |
Jeffrey Cucunato
| Managing Director of BlackRock, Inc. since 2005.
|
5
(a)(2) As of March 31, 2021:
(ii) Number of Other Accounts Managed and Assets by Account Type | (iii) Number of Other Accounts and Assets for Which Advisory Fee is Performance-Based | |||||||||||
(i) Name of Portfolio Manager | Other Registered Investment Companies | Other Pooled Investment Vehicles | Other Accounts | Other Registered Investment Companies | Other Pooled Investment Vehicles | Other Accounts | ||||||
Stephen Kelly | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
$0 | $0 | $0 | $0 | $0 | $0 | |||||||
Jonathan Seeg | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
$0 | $0 | $0 | $0 | $0 | $0 | |||||||
Joseph Auriemma | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
$0 | $0 | $0 | $0 | $0 | $0 | |||||||
James Keenan | 28 | 34 | 18 | 0 | 0 | 6 | ||||||
$43.02 Billion | $15.71 Billion | $9.83 Billion | $0 | $0 | $1.36 Billion | |||||||
Jeffrey Cucunato | 13 | 4 | 2 | 0 | 0 | 1 | ||||||
$5.00 Billion | $178.4 Million | $1.35 Billion | $0 | $0 | $135.6 Million |
(iv) Portfolio Manager Potential Material Conflicts of Interest
BlackRock has built a professional working environment, firm-wide compliance culture and compliance procedures and systems designed to protect against potential incentives that may favor one account over another. BlackRock has adopted policies and procedures that address the allocation of investment opportunities, execution of portfolio transactions, personal trading by employees and other potential conflicts of interest that are designed to ensure that all client accounts are treated equitably over time. Nevertheless, BlackRock furnishes investment management and advisory services to numerous clients in addition to the Fund, and BlackRock may, consistent with applicable law, make investment recommendations to other clients or accounts (including accounts which are hedge funds or have performance or higher fees paid to BlackRock, or in which portfolio managers have a personal interest in the receipt of such fees), which may be the same as or different from those made to the Fund. In addition, BlackRock, Inc., its affiliates and significant shareholders and any officer, director, shareholder or employee may or may not have an interest in the securities whose purchase and sale BlackRock recommends to the Fund. BlackRock, Inc., or any of its affiliates or significant shareholders, or any officer, director, shareholder, employee or any member of their families may take different actions than those recommended to the Fund by BlackRock with respect to the same securities. Moreover, BlackRock may refrain from rendering any advice or services concerning securities of companies of which any of BlackRock, Inc.’s (or its affiliates’ or significant shareholders’) officers, directors or employees are directors or officers, or companies as to which BlackRock, Inc. or any of its affiliates or significant shareholders or the officers, directors and employees of any of them has any substantial economic interest or possesses material non-public information. Certain portfolio managers also may manage accounts whose investment strategies may at times be opposed to the strategy utilized for a fund. It should also be noted that Messrs. Cucunato and Keenan may be managing hedge fund and/or long only accounts, or may be part of a team managing hedge fund and/or long only accounts, subject to incentive fees. Messrs. Cucunato and Keenan may therefore be entitled to receive a portion of any incentive fees earned on such accounts.
As a fiduciary, BlackRock owes a duty of loyalty to its clients and must treat each client fairly. When BlackRock purchases or sells securities for more than one account, the trades must be allocated in a manner consistent with its fiduciary duties. BlackRock attempts to allocate investments in a fair and equitable manner among client accounts, with no account receiving preferential treatment. To this end, BlackRock, Inc. has adopted policies that are intended to ensure reasonable efficiency in client transactions and provide BlackRock with sufficient flexibility to allocate investments in a manner that is consistent with the particular investment discipline and client base, as appropriate.
6
(a)(3) As of March 31, 2021:
Portfolio Manager Compensation Overview
The discussion below describes the portfolio managers’ compensation as of March 31, 2021.
BlackRock’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include a base salary, a performance-based discretionary bonus, participation in various benefits programs and one or more of the incentive compensation programs established by BlackRock.
Base Compensation. Generally, portfolio managers receive base compensation based on their position with the firm.
Discretionary Incentive Compensation – Messrs. Kelly, Seeg and Auriemma
Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio manager’s group within BlackRock, the investment performance, including risk-adjusted returns, of the firm’s assets under management or supervision by that portfolio manager relative to predetermined benchmarks, and the individual’s performance and contribution to the overall performance of these portfolios and BlackRock. In most cases, these benchmarks are the same as the benchmark or benchmarks against which the performance of the Funds or other accounts managed by the portfolio managers are measured. Among other things, BlackRock’s Chief Investment Officers make a subjective determination with respect to each portfolio manager’s compensation based on the performance of the Funds and other accounts managed by each portfolio manager relative to the various benchmarks. The performance of these portfolio managers is not measured against a specific benchmark.
Discretionary Incentive Compensation – Messrs. Keenan and Cucunato
Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio manager’s group within BlackRock, the investment performance, including risk-adjusted returns, of the firm’s assets under management or supervision by that portfolio manager relative to predetermined benchmarks, and the individual’s performance and contribution to the overall performance of these portfolios and BlackRock. In most cases, these benchmarks are the same as the benchmark or benchmarks against which the performance of the Funds or other accounts managed by the portfolio managers are measured. Among other things, BlackRock’s Chief Investment Officers make a subjective determination with respect to each portfolio manager’s compensation based on the performance of the funds and other accounts managed by each portfolio manager relative to the various benchmarks. Performance of fixed income funds is measured on a pre-tax and/or after-tax basis over various time periods including 1-, 3- and 5- year periods, as applicable. With respect to these portfolio managers, such benchmarks for the Fund and other accounts are:
7
Portfolio Manager | Benchmark | |
James Keenan | A combination of market-based indices (e.g., The Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Cap Index), certain customized indices and certain fund industry peer groups. | |
Jeffrey Cucunato | Bloomberg Barclays US Credit Index |
Distribution of Discretionary Incentive Compensation. Discretionary incentive compensation is distributed to portfolio managers in a combination of cash, deferred BlackRock, Inc. stock awards, and/or deferred cash awards that notionally track the return of certain BlackRock investment products.
Portfolio managers receive their annual discretionary incentive compensation in the form of cash. Portfolio managers whose total compensation is above a specified threshold also receive deferred BlackRock, Inc. stock awards annually as part of their discretionary incentive compensation. Paying a portion of discretionary incentive compensation in the form of deferred BlackRock, Inc. stock puts compensation earned by a portfolio manager for a given year “at risk” based on BlackRock’s ability to sustain and improve its performance over future periods. In some cases, additional deferred BlackRock, Inc. stock may be granted to certain key employees as part of a long-term incentive award to aid in retention, align interests with long-term shareholders and motivate performance. Deferred BlackRock, Inc. stock awards are generally granted in the form of BlackRock, Inc. restricted stock units that vest pursuant to the terms of the applicable plan and, once vested, settle in BlackRock, Inc. common stock. These portfolio managers have deferred BlackRock, Inc. stock awards.
For certain portfolio managers, a portion of the discretionary incentive compensation is also distributed in the form of deferred cash awards that notionally track the returns of select BlackRock investment products they manage, which provides direct alignment of portfolio manager discretionary incentive compensation with investment product results. Deferred cash awards vest ratably over a number of years and, once vested, settle in the form of cash. Only portfolio managers who manage specified products and whose total compensation is above a specified threshold are eligible to participate in the deferred cash award program.
Other Compensation Benefits. In addition to base salary and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following:
Incentive Savings Plans — BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock, Inc. employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 8% of eligible pay contributed to the plan capped at $5,000 per year, and a company retirement contribution equal to 3-5% of eligible compensation up to the Internal Revenue Service limit ($290,000 for 2021). The RSP offers a range of investment options, including registered investment companies and collective investment funds managed by the firm. BlackRock, Inc. contributions follow the investment direction set by participants for their own contributions or, absent participant investment direction, are invested into a target date fund that corresponds to, or is
8
closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock, Inc. common stock at a 5% discount on the fair market value of the stock on the purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares of common stock or a dollar value of $25,000 based on its fair market value on the purchase date. All of the eligible portfolio managers are eligible to participate in these plans.
(a)(4) Beneficial Ownership of Securities – As of March 31, 2021.
Portfolio Manager | Dollar Range of Equity Securities
| |
Stephen Kelly | None | |
Jonathan Seeg | None | |
Joseph Auriemma | None | |
James Keenan | None | |
Jeffrey Cucunato | None |
(b) Not Applicable
Item 9 – | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not Applicable due to no such purchases during the period covered by this report. |
Item 10 – | Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures. |
Item 11 – | Controls and Procedures |
(a) The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12 – | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies – Not Applicable |
Item 13 – | Exhibits attached hereto |
(a)(1) Code of Ethics – See Item 2
(a)(2) Section 302 Certifications are attached
(a)(3) Not Applicable
(a)(4) Not Applicable
(b) Section 906 Certifications are attached
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock Private Investments Fund
By: | /s/ John M. Perlowski | |||
John M. Perlowski | ||||
Chief Executive Officer (principal executive officer) of | ||||
BlackRock Private Investments Fund |
Date: June 3, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ John M. Perlowski | |||
John M. Perlowski | ||||
Chief Executive Officer (principal executive officer) of | ||||
BlackRock Private Investments Fund |
Date: June 3, 2021
By: | /s/ Trent Walker | |||
Trent Walker | ||||
Chief Financial Officer (principal financial officer) of | ||||
BlackRock Private Investments Fund |
Date: June 3, 2021
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