Deal sees BlackRock pay $3bn in cash and 12 million in common shares for GIP
Acquisition catapults BlackRock into top three of global infrastructure managers
Combined $150bn infrastructure platform to be led by GIP management team
January 12, 2024 (Preqin News) – BlackRock has announced it is to acquire fund manager Global Infrastructure Partners in a deal that will significantly expand BlackRock’s presence in the $1tn infrastructure sector.
The two firms announced on Friday that BlackRock will purchase GIP for $3bn in cash and approximately 12 million shares of BlackRock common stock. Based on BlackRock’s current share price, it values the deal at around $12.5bn.
BlackRock currently has over $50bn of infrastructure assets under management (AUM), compared with GIP’s $100bn AUM. The acquisition will catapult BlackRock into the big three global infrastructure managers, after Macquarie Asset Management ($200bn of infrastructure AUM) and Brookfield ($180bn).
Fundraising for infrastructure has slowed since 2022 as higher interest rates and inflation proved stubborn barriers to deal-making. Total capital raised from final closes stood at $20.9bn as of October 2023, representing 12% of the total for 2022, according to the Preqin Global Report: Infrastructure 2024.
However, longer-term prospects for the asset class are supported by continued momentum in areas such as the energy transition and the digital economy. At the same time, the sector is expected to benefit from policymakers’ onshoring and near-shoring efforts as they seek to avoid future supply chain upheavals amid an increase in geopolitical tensions. Preqin forecasts that global infrastructure AUM will reach $1.7tn by 2028.
‘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’s Chairman and CEO in a statement announcing the deal. ‘We believe the expansion of both physical and digital infrastructure will continue to accelerate, as governments prioritize self-sufficiency and security through increased domestic industrial capacity, energy independence, and onshoring or near-shoring of critical sectors.’
The combined infrastructure platform will be led by GIP’s management team, headed by its founding Partner, Chairman, and CEO Bayo Ogunlesi, and four of its founding partners.
GIP, which was founded in 2006, manages assets across infrastructure equity and debt, with a focus on energy, transport, water, and waste, and digital. The latest in its global equity flagship series of funds, Global Infrastructure Partners V, is currently in market with a target size of $25bn, according to Preqin data. Its predecessor fund, Global Infrastructure Partners IV, closed in 2019 above target at $22.1bn.
‘Today’s announcement affirms the asset class’ growing role in private capital markets, in part from Larry Fink’s reference to constrained government balance sheets as a factor in anticipated strong demand for private capital needed to displace state investment,’ said Alex Murray, Head of Real Assets, Research Insights, at Preqin.
‘Success and failure in infrastructure investments are intrinsically linked to how well they interact with government policy and broader regulation. The heightened need for investment to deliver on pressing climate mitigation targets is driving innovation in business models that will aid the flow of private capital across infrastructure sectors.’
The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.