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Rating:This Bet Cost a BlackRock PM His Job ... But It Paid Off Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, June 21, 2017

This Bet Cost a BlackRock PM His Job ... But It Paid Off

News summary by MFWire's editors

An ex-BlackRock PM has made good on the very bet that cost him his job five years ago.

On Monday Pittsburgh-based, publicly traded, natural-gas-focused energy company EQT unveiled a deal to buy Canonsburg, Pennsylvania-based, publicly traded natural-gas-focused energy company Rice Energy for about $6.7 billion in stock and cash. Daniel J. Rice III, who left BlackRock in 2012, and his family own an estimated $1-billion stake in Rice Energy.

Rice is a 21-year State Street Research and Management veteran who joined BlackRock in 2005 when it bought SSRM. He had PMed SSRM's Global Resources Fund, and starting in 2005 he became a co-PM on the BlackRock Energy & Resources Fund. Meanwhile, in 2008 Rice's sons — Derek (32), Toby (35), and Daniel J. Rice IV (36) (the first two studied geology and related fields, the latter became an investment banker) — created Rice Energy, with seed money from their father.

In 2012, Daniel Rice III stepped down, from the then-$4.4-billion fund (it now has $196.9 million) and then from BlackRock, under the cloud of avoiding any appearance of a potential conflict of interest. Alpha Natural Resources, one of the largest holdings of the BlackRock fund he PMed, was part of a joint venture with none other than Rice Energy. In 2014 the SEC hit BlackRock with a wells notice over the Rice situation, and in 2015 the SEC fined BlackRock $12 million. (BlackRock neither admitted nor denied the SEC's findings.)

Meanwhile, also in 2014, Rice Energy IPOed, which made Daniel Rice III a billionaire, Bloomberg writes. And now EQT is buying Rice Energy, triggering change-of-control payments for Daniel Rice III's sons (as executives of Rice Energy) in addition to the gains from selling the family's stake in the company. BlackRock and Rice Energy both declined to comment on Bloomberg's story.

"This is a big day," Daniel Rice III, 65, tells the publication. "The boys created a great company."

"I was probably 10 percent of it," he adds. "It's their company, their management, their decision to hire employees that made it the company it became." 

Edited by: Neil Anderson, Managing Editor


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