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February 22, 2024
PI Global Investments

BlackRock Scoops Up Energy Infrastructure Giant GIP

Investment management giant BlackRock has struck a $12.5 billion deal for Global Infrastructure Partners (GIP) in preparation of an expected surge in worldwide infrastructure needs, driven partly by the low-carbon energy transition.

“If we are going to decarbonize the world, the amount of capital and infrastructure is going to be very necessary,” BlackRock CEO Larry Fink told investors Friday.

Needed investments in logistics assets like ports and digital infrastructure like data centers as the world becomes increasingly connected and digitized were also cited as key pillars of BlackRock’s expectation for tremendous growth in infrastructure investment opportunities in the coming years.

“Infrastructure is a $1 trillion market, forecasted to be one of the fastest-growing segments of private markets,” Fink explained.

Fink cited the greater role that private capital will need to play in the infrastructure space given rising public deficits and the sheer size of capital required to “modernize” the digital world and “advance” energy independence and the energy transition. He also noted the increased corporate appetite to sell portions of infrastructure assets or divisions rather than fully exit, raising the number of potential investments on offer.

BlackRock already manages an infrastructure portfolio worth more than $50 billion, including its recent $550 million investment in Occidental Petroleum’s flagship Stratos direct air capture project.

But its deal to acquire GIP will catapult the investment giant from the 14th-largest private infrastructure asset manager to the second-largest when combined with the $100 billion-plus platform held by GIP, a BlackRock investor presentation showed. Macquarie still tops the list.

Executives from BlackRock and GIP told investors Friday that the tie-up is a way to provide a wider suite of capital solutions to infrastructure firms than either firm could on a standalone basis, while pairing complementary rather than highly overlapping points of expertise. Larger investments are also on the table now, investor materials noted.

Select Global Infrastructure Partners Energy Holdings
Adnoc Gas Pipelines Abu Dhabi joint venture with Adnoc
Access Midstream Partners Gas assets across multiple US shale gas plays
EnLink Midstream Gas and NGL assets in Texas, Oklahoma and Louisiana
Freeport LNG US LNG export facility
Gladstone LNG Australia LNG export facility
Hess Midstream Partners Bakken joint venture with Hess
Medallion Gathering and Processing US Permian Basin crude infrastructure
QCLNG Common Facilities Supporting infrastructure for Australia’s QCLNG export facility
Rio Grande LNG US LNG export facility
Ruby Pipeline Natural gas pipeline serving Western US
TransitGas Swiss natural gas pipeline system linking Germany, Italy and France
Renewables and Power
ACS Renewables Solar and wind generation in Spain + global renewable power generation
Atlas Renewable Energy Latin American renewable energy developer
Bluepoint Wind New York/New Jersey offshore wind joint venture with Ocean Winds
Borkum Riffgrund 2 Offshore wind project in German North Sea
Channelview Cogeneration Natural gas -fired cogeneration in Texas
Clearway Energy US wind, solar and natural gas power developer
Competitive Power Ventures US natural gas and wind power developer
East India Petroleum Liquid fuel storage services
Empresa Electrica Guacolda Chilean coal-fired power generation
Eolian US renewable power developer
Gode Wind 1 Offshore wind project in German North Sea
Hornsea 1 Offshore wind project in Southern North Sea
Naturgy Global vertically integrated utility
Saavi Energia Mexican power generator
Skyborn Renewables European and Asia-Pacific offshore wind developer
Terra-Gen Power US wind, geothermal and solar developer
Vena Energy Asia-Pacific solar, wind and batter storage developer

Familiar Territory

That’s not to say either firm is a stranger to the global energy industry, or oil and gas in particular. On the equities side, BlackRock is one of the largest investors in many of the top Western oil and gas firms, despite claims from various US states’ attorneys general that it is “boycotting” oil and gas in pursuit of ESG leadership.

Fink has also argued repeatedly that direct investments in oil and gas infrastructure should not be viewed as running counter to global energy transition ambitions, given the likely long tail in fossil fuel demand that will keep pipes and tanks in operation for the foreseeable future.

Headline BlackRock investments in the oil and gas sector include a stake in Saudi Aramco’s gas pipeline subsidiary, acquired in 2021, and an interest in Abu Dhabi National Oil Co. oil infrastructure it acquired in 2019.

GIP is an even bigger heavyweight in energy infrastructure, with substantial holdings in LNG export facilities, US and European natural gas midstream assets and natural gas and renewable power generation. The firm is also in a joint venture with Adnoc in its gas pipeline subsidiary.

“The marriage with BlackRock is a marriage made in heaven,” said GIP CEO Bayo Ogunlesi, who will join BlackRock’s board of directors.

The tie-up, which consists of $3 billion cash and 12 million shares of BlackRock common stock, is expected to close in the third quarter.

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