BlackRock is to acquire Global Infrastructure Partners (GIP), potentially creating an infrastructure fund manager with more than US$150bn (€137bn) in assets under management (AUM).
BlackRock, the world’s largest asset manager, said it would buy GIP, the third-largest infrastructure fund manager, for US$3bn in cash and approximately 12m shares of BlackRock common stock.
According to IPE Real Assets Top 100 ranking of infrastructure fund managers, BlackRock came 17th last year, with an infrastructure AUM of €27.7bn, while GIP was third with €82.3bn. With a combined AUM, the new entity would still trail the two largest firms, Macquarie and Brookfield.
In a joint announcement, BlackRock and GIP said their “highly complementary infrastructure offerings create a comprehensive global infrastructure franchise with differentiated origination and asset management capabilities”.
Founded in 2006, GIP invests across infrastructure equity and debt, with a focus on energy, transport, water and waste, and digital sectors. BlackRock’s infrastructure business, established in 2011, includes infrastructure equity, debt and solutions.
“Marrying the proprietary origination and business improvement capabilities of GIP and BlackRock’s global corporate and sovereign relationships provides a platform for diversified, large-scale sourcing to support deal flow and co-investment opportunities for clients,” the firms said.
“We believe bringing GIP and BlackRock together will deliver to clients the benefits of broader origination and business improvement capabilities.”
The GIP management team, led by Bayo Ogunlesi and four of its founding partners, will lead the combined infrastructure platform. Ogunlesi is set to join the BlackRock board at the next regularly scheduled meeting following the closing of the transaction.
“Infrastructure is one of the most exciting long-term investment opportunities, as a number of structural shifts re-shape the global economy,” said Laurence D Fink, BlackRock Chairman and CEO.
“We believe the expansion of both physical and digital infrastructure will continue to accelerate, as governments prioritise self-sufficiency and security through increased domestic industrial capacity, energy independence and on-shoring or near-shoring of critical sectors. Policymakers are only just beginning to implement once-in-a-generation financial incentives for new infrastructure technologies and projects.
He added: “We founded BlackRock 35 years ago based on a unique understanding of investment risk and the factors and forces driving investment returns. GIP’s deep understanding of the factors and forces driving operational efficiency for long-term value creation have made them a global leader in infrastructure investing. Bringing these two firms together will create the infrastructure platform to deliver best-in-class investment opportunities for clients globally, and we couldn’t be more excited about the opportunities ahead of us.”
Ogunlesi said: “I’m excited about the power of this combination and the prospect of working with Larry and his talented team. We share with BlackRock a culture of collaboration, client focus, investment partnership and commitment to excellence.
“Investors have adopted private infrastructure investing for its ability to provide stable cashflows, less correlated returns and a hedge against inflation. Global corporates have turned to private infrastructure as a fast innovator and a more commercially agile owner of infrastructure assets that aren’t core to their commercial businesses.
“This platform is set to be the pre-eminent, one-stop infrastructure solutions provider for global corporates and the public sector, mobilising long-term private capital through long-standing firm relationships.”
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