BlackRock will lose management of $8.5B Texas fund assets

investmentnews.com:

It was just weeks ago when BlackRock Inc. CEO Larry Fink took the stage with Texas Lt. Gov. Dan Patrick at an industry event in Houston.

The chummy meeting between the Republican politician and the head of the investment behemoth — Patrick praised Fink as the “King of Wall Street” – led to speculation that the state’s tensions with BlackRock over its fossil fuel policies were easing, if not over.

Aaron Kinsey didn’t get that memo. The chairman of the Texas State Board of Education on Tuesday delivered notice to BlackRock that the state’s $53 billion fund for schools would be terminating the firm’s management of about $8.5 billion in assets. 

The notice came as a surprise — even amid a steady drumbeat of news surrounding Republican states’ anti-ESG fight over the last three years. One of the few comparable moves was in late 2022, when Florida said it would pull $2 billion from BlackRock, the world’s largest money manager.

Kinsey said BlackRock was terminated by the fund’s leadership to comply with a 2021 Texas law that restricts investments with companies that engage in so-called boycotts of the fossil fuels industry. The firm is on a list of companies that State Comptroller Glenn Hegar considers to be violators.

The announcement elicited a sharp rebuke from BlackRock, which described the decision as “unilateral” by Kinsey and one that would hurt Texas schools. The New York-based firm has repeatedly said that it doesn’t boycott the energy industry. In fact, it boasted about its ties, saying it’s one of the largest investors in energy companies – including in Texas. Last year, BlackRock announced a $550 million investment into a project with Houston-based Occidental Petroleum Corp.

“At a time when investors should be more