The firm, which announced its full-year and Q4 results late last week, has agreed to buy a $100 billion AuM infrastructure house, betting that this asset class remains a large growth area around the world.
BlackRock, the
world’s largest asset manager, has acquired all of Global
Infrastructure Partners (GIP) for $3 billion of cash about 12
million of common BlackRock stock as the firm seeks to tap into
the $1 trillion infrastructure sector.
The announcement late last week was made as New York-listed
BlackRock announced that its net income in the fourth quarter of
2023 was $1.375 billion, up from $1.259 billion a year before.
For the whole of 2023, net income rose to $5.5 billion from
$5.178 billion in 2022. Total assets under management stood at
just over $10 trillion; BlackRock logged net inflows of $95.647
billion in Q4 2023, down from $306.57 billion in 2022.
Approximately 30 per cent of the total consideration, all in
stock, will be deferred and is expected to be issued in
approximately five years, subject to the satisfaction of certain
post-closing events, BlackRock said.
The firm said infrastructure is forecast to be one of the
“fastest growing segments of private markets in the years
ahead,” buoyed by a need for upgraded fibre broadband, cell
towers and data centres; renewed investment in logistical hubs
such as airports, railroads and shipping ports as supply chains
are rewired; and a movement towards decarbonisation and energy
security. BlackRock also sees a need for more private capital in
the space as governments try and plug holes in large public
deficits.
Acquiring GIP creates a business with a combined $150 billion of
assets under management. GIP recently boosted its global equity
flagship fund series, and the latest fund (2019) surpassed $22
billion, BlackRock said.
At the time of the announcement, BlackRock said it had more than
$50 billion of AuM in the infrastructure side, made up of debt,
equity and other solutions.
The GIP management team, led by Bayo Ogunlesi and four of its
founding partners, will lead the combined infrastructure
platform.
Subject to completion of customary onboarding procedures,
BlackRock has also agreed to appoint Ogunlesi, GIP founding
partner, chairman and CEO, to its board at the next regularly
scheduled board meeting following the closing of the transaction.
“We believe the expansion of both physical and digital
infrastructure will continue to accelerate, as governments
prioritise self-sufficiency and security through increased
domestic industrial capacity, energy independence, and onshoring
or near-shoring of critical sectors,” Laurence Fink, BlackRock
CEO and chairman, said. “Policymakers are only just beginning to
implement once-in-a-generation financial incentives for new
infrastructure technologies and projects.”
GIP, which has around $100 billion in AuM across infrastructure
equity and credit strategies, and about 400 staff, holds more
than 40 portfolio companies. The firm has invested in Gatwick,
Edinburgh, and Sydney Airports, CyrusOne (data centres), Suez
(water and waste), Pacific National and Italo (rail), Peel Ports
and Port of Melbourne, and several major renewables platforms,
including Clearway, Vena, Atlas and Eolian.
BlackRock intends to fund the cash consideration through $3
billion of additional debt. BlackRock, which is rated AA- with
S&P and Aa3 with Moody’s, said the deal is not likely to
meaningfully change its leverage profile.
Financial impact
The deal is expected to be modestly accretive to BlackRock’s
as-adjusted earnings per share and operating margin in the first
full year post-close.
The transaction is expected to close in the third quarter of 2024
subject to customary regulatory approvals and other closing
conditions.
Perella Weinberg Partners served as lead financial advisor to
BlackRock, with Skadden, Arps, Slate, Meagher & Flom and Fried,
Frank, Harris, Shriver & Jacobson acting as legal counsel.
Evercore served as lead financial advisor and Kirkland & Ellis
and Debevoise & Plimpton acted as legal counsel to GIP.