The growth of private markets in infrastructure underpins the industrial logic of BlackRock’s $12.5bn deal for infrastructure asset manager Global Infrastructure Partners, BlackRock CEO Larry Fink said today.
In a Friday morning call with analysts, Fink emphasized the expected growth of private capital in infrastructure and energy markets over the next 10 years as a major factor in its acquisition of GIP.
“Growing public deficits, a modernizing digital world, advancing energy independence, and the energy transition are driving the mobilization of private capital to fund critical infrastructure,” Fink said.
“I believe that the amount of capital that is to be needed as we digitize everything, the need to upgrade our power grids worldwide is a must,” he said. “The capital associated with that is going to be enormous.”
BlackRock is acquiring GIP for $3bn of cash and approximately 12 million shares of BlackRock common stock. The combination creates the second-largest global infrastructure private markets business, with over $150m in client assets, according to a presentation.
Fink expects BlackRock to continue to partner with corporations in acquiring asset carve-outs or co-investing in infrastructure projects, such as its deals with Occidental Petroleum (direct air capture) and AT&T (5G buildout).
GIP Founding Partner, Chairman, and CEO Bayo Ogunlesi, who is slated to become a member of BlackRocks’ board following the transaction, highlighted the complementary aspects of the business combination.
“BlackRock has built a terrific infrastructure business,” he said. “But they make mid-market or mid-cap investments. We make large-cap investments.”
He added, “[BlackRock has] a terrific infrastructure debt business that is mostly investment grade, ours is mostly below investment grade. They have a capital solutions business that we don’t have. So if you put these two businesses together, we can go to clients, large cap clients, mid cap clients, offer them a complete array of solutions.”
