UPDATE 1-BlackRock stops share buying to get into S&P 500

Tue Jan 25, 2011 5:36pm GMT

Quotes

   

* BlackRock eligible for S&P 500 since November

* S&P has no schedule for adding companies to index

* Inclusion could give shares a boost - investor (Adds byline, background, investor comment)

By Aaron Pressman

BOSTON, Jan 25 (Reuters) - BlackRock Inc (BLK.N), the world's largest money manager, said it has stopped buying back its shares, aiming to preserve its public float as it lays the groundwork to be included in the Standard & Poor's 500 index.

Acknowledging for the first time that BlackRock was aiming to be added to the index, Chief Financial Officer Anne Marie Petach said on Tuesday she believed all criteria had been met.

"We think an important criterion within that is the degree of public float, and we just think protecting that public float is an important priority at this point in time," she said on a conference call after the release of fourth-quarter results.

About $1.1 trillion is invested to track the index, including through exchange-traded funds and other accounts run by BlackRock, according to S&P.

Gaining entry to the S&P 500 could give BlackRock shares a short-term boost and lead to greater stability over the long run, analysts and investors said.

"They're a highly logical candidate," said Elizabeth Bramwell, manager of the Sentinel Growth Leaders fund, which owns Blackrock shares. "It's more a matter of when rather than if."

Companies are periodically added to and dropped from the index, which is compiled by McGraw-Hill's MHP.N S&P unit. S&P has said there is no set schedule for making changes, and it declined to comment on speculation about possible additions.

BlackRock must maintain a so-called free-float of at least 50 percent of its shares, a key standard for inclusion in the index, Petach told analysts.

Since it went public in 1999, many of BlackRock's shares have been tied up with affiliated shareholders.

PNC Financial Services Group (PNC.N) was an early investor and Bank of America's (BAC.N) Merrill Lynch received shares when BlackRock bought its fund business in 2006.

More recently, British bank Barclays (BARC.L) got shares as part of the $15 billion payment from BlackRock for its global investment unit.

That has meant that despite BlackRock's prominence and roughly $50 billion market capitalization, it has not been eligible for inclusion under the 50 percent free-float rule.

In November, however, Bank of America and PNC sold almost 59 million shares to the public in a secondary offering, pushing BlackRock's free float above 50 percent. (Reporting by Aaron Pressman, editing by Gerald E. McCormick and Ted Kerr)