BlackRock Inc., the world’s largest money manager, has announced a groundbreaking move to acquire Global Infrastructure Partners (GIP) for a staggering $12.5 billion, marking the firm’s most significant acquisition in over a decade. The deal, expected to close in the third quarter, will see BlackRock pay $3 billion in cash and approximately 12 million shares, valued at $9.5 billion based on Thursday’s closing prices.
Founded in 2006 by Adebayo Ogunlesi, a former Credit Suisse executive, GIP manages an impressive $100 billion in assets. The acquisition positions BlackRock as a major player in long-term investments in energy, transportation, and digital infrastructure. Adebayo Ogunlesi, who serves as GIP’s chairman and CEO, will join BlackRock’s board and global executive committee.
In a memo to employees, BlackRock CEO Larry Fink and President Rob Kapito emphasized the growing demand for new infrastructure, including digital infrastructure, upgraded logistics hubs, and initiatives for decarbonization and energy security. They stated, “This will be one of the fastest-growing areas of our industry over the next 10 years.”
This acquisition reflects BlackRock’s strategic shift under Fink’s leadership, aiming to become a prominent player in the rapidly expanding market for private and alternative assets. While the firm initially gained prominence with index-based investments, the move towards illiquid funds supporting major, complex projects signifies a new phase for BlackRock.
Alternative assets currently constitute about 3% of BlackRock’s assets under management but contribute approximately 10% of its fees. The firm’s assets in illiquid alternatives witnessed a remarkable 65% increase in the three years leading up to September 2023. The acquisition of GIP is a significant step in BlackRock’s goal to offer a comprehensive range of investment options, catering to the increasing demand from institutional clients like pensions, endowments, and sovereign wealth funds.
Combining GIP’s $100 billion management with BlackRock’s existing infrastructure assets of approximately $50 billion positions the asset manager to compete with industry giants like Macquarie Asset Management and Brookfield Asset Management. BlackRock has been actively involved in substantial investments in recent years, including pipelines in the Middle East, a carbon-capture project in Texas, and a fiber network venture with AT&T Inc.
The acquisition comes on the heels of BlackRock’s better-than-expected fourth-quarter earnings and a management shuffle. BlackRock’s total client assets have surpassed $10 trillion for the first time in two years.
As investors seek opportunities in global infrastructure, BlackRock’s acquisition of GIP reflects the industry’s recognition of the potential for profitable investments in energy-transition projects, data centers, and other infrastructure ventures. The deal awaits closure in the third quarter, with financial advisory provided by Perella Weinberg Partners for BlackRock and Evercore Inc. as the lead adviser for GIP. Approximately 30% of the shares will be deferred for about five years, and BlackRock plans to issue debt to cover the cash portion of the transaction.