Wall Street giant BlackRock has agreed to buy Global Infrastructure Partners (GIP) for over $12.5 billion in cash and stock, in an industry-shaking move to scale up its presence in private alternative investments across digital infrastructure, energy transition, and transportation.
BlackRock will hand out $3 billion in cash and around 12 million of its shares, which will eventually make GIP its second-largest shareholder after the transfer of shares is complete within five years. The deal, one of the biggest mergers in the history of private infrastructure investing, is expected to close in the third quarter of 2024.
The transaction marks another transformational deal for BlackRock since its buyout of BGI, a British asset manager previously owned by Barclays, around the tailend of the Global Financial Crisis in 2009.
The acquisition of the New York-based fund manager, which has roughly $106 billion in assets under management, will create a combined infrastructure platform of over $150 billion for BlackRock, which has more than $50 billion in infrastructure business.
Founded in 2006, GIP manages assets across infrastructure equity and debt with a focus on energy, transport, water and waste, and digital sectors with investment professionals across its offices in the US, UK, Australia, India, Hong Kong, and Singapore. It raised over $22 billion for its latest flagship fund in 2019 and has invested in several international airports, including Edinburgh, Sydney, and London Gatwick airports.
Infrastructure investments have been getting more attention and allocations from alternative asset managers in recent times with its defensive nature which has less correlation with the broader economic trends and ability to generate stable returns. The merger will give the merged entity an enhanced investment capability and client pool to rival the likes of Macquarie Asset Management and Brookfield Asset Management in a $1-trillion market.
“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,” said GIP CEO Bayo Ogunlesi, who will be joining the integrated platform alongside other four founding partners.
BlackRock CEO Larry Fink, in an earnings call with analysts on Friday, commented on the transaction that his firm is guided by “the needs of our clients, growing public deficits, a modernising digital world, advancing energy independence, and the energy transition are driving the mobilisation of private capital to fund critical infrastructure.”
“Infrastructure investment is a fast-growing market. In a higher rate environment, the ability to drive operational enhancements will be critical to investment performance,” he added.
BlackRock shares were trading around 6% down at $786.70 apiece on NYSE on Friday morning.
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