BlackRock, the world’s largest asset manager, is venturing into the infrastructure market with its acquisition of Global Infrastructure Partners (GIP) in a deal worth approximately $12.5 billion. The transaction, expected to be finalized in the third quarter, includes $3 billion in cash and 12 million shares of BlackRock’s common stock. Approximately 30% of the total consideration will be deferred and issued in about five years.
GIP, one of the leading independent equity and debt fund managers focused on infrastructure, manages over $100 billion in client assets dedicated to energy, transport, water and waste, and digital infrastructure. BlackRock sees infrastructure as a rapidly growing segment of private markets and estimates the current market to be valued at $1 trillion. Structural trends such as upgrading digital infrastructure are expected to drive further growth in this sector.
With its roots in Blackstone, the world’s largest alternative investment manager, the move by BlackRock signifies its desire to align itself closely with the private equity and credit industries. This strategic acquisition positions BlackRock to tap into the potential opportunities brought forth by the booming infrastructure market.
BlackRock Continues to Expand in Private Markets
BlackRock, the world’s largest asset manager, has announced its acquisition of GIP (Global Infrastructure Partners), a leading infrastructure investment firm. With this deal, BlackRock aims to solidify its position as a major player in the private markets infrastructure space, boasting a staggering $150 billion in total assets under management.
According to Larry Fink, Chairman and CEO of BlackRock, this strategic move will provide their clients with attractive investment opportunities, such as high-coupon, inflation-protected, and long-duration investments. Fink expressed his confidence in the company’s future, stating that this transformation positions BlackRock better than ever.
As the explosion of investor interest in exchange-traded funds (ETFs) continues to drive BlackRock’s profits, the acquisition of GIP aligns with the company’s growth strategy. While BlackRock currently manages over $3.5 trillion in assets, a substantial portion resides in their ETF business. However, there have been recent discussions on whether passive investing has reached its peak. With intense competition and pressure on margins, BlackRock needed to identify new avenues for profitable growth.
Private equity emerged as the answer to this challenge. As the demand for private markets and private credit grows among institutional investors, BlackRock’s acquisition of GIP sends a clear message.
Overall, this bold move demonstrates BlackRock’s determination to extend its reach and diversify its offerings beyond traditional investment vehicles. With their expanded presence in private markets, the company is well-positioned to navigate the ever-changing investment landscape.