Jan 12, 2024 - Business

BlackRock gets even bigger, striking $12.5 billion deal for Global Infrastructure Partners

BlackRock CEO Larry Fink

BlackRock chairman and CEO Larry Fink. Photo by Michael M. Santiago/Getty Images.

BlackRock, the world's largest asset manager, on Friday announced a $12.5 billion agreement to acquire Global Infrastructure Partners.

Why it matters: This appears to be the richest acquisition ever of a private equity firm, even if BlackRock views GIP as more of an infrastructure owner/operator than a traditional PE shop.

  • It's also BlackRock's biggest deal since 2009, when it paid $13.5 billion for Barclays Global Investors.

Details: BlackRock will pay $3 billion of cash and around 12 million shares of common stock for GIP, which has approximately $100 billion in assets under management.

  • GIP's management team, led by Bayo Ogunlesi, will oversee BlackRock's entire infrastructure platform, which already manages around $50 billion across areas like renewables and infrastructure debt. Ogunlesi also will step down as lead independent director with Goldman Sachs.
  • The deal is set to close in Q3, pending regulatory approvals.

Backstory: Ogunlesi and BlackRock CEO Larry Fink worked together decades ago at First Boston, and a source says that merger talks began back in September.

  • If that sounds like a very short time to strike such a landmark deal, you'd be right.
  • GIP's deals have included airports in London and Sydney, plus a midstream energy joint venture with Hess.

Zoom in: BlackRock has been increasing its private market exposure for years, but this is much more about an infrastructure thesis than it is about privates (which is why GIP will oversee the existing infra group, not the PE group).

  • In short, BlackRock believes there are several secular tailwinds for infrastructure that don't necessarily apply elsewhere in PE.
  • This is led by global inflation, which BlackRock expects to persist longer than do some others. As such, stable cash-generators like marine terminals and airports become particularly attractive assets.
  • Second is the ongoing need to rework supply chains, as made evident during the COVID-19 pandemic, including nearshoring.
  • Finally there's BlackRock's continued efforts toward decarbonization and energy transition, even if Fink & Co. have sought to leave the politically-divisive ESG moniker behind.

The bottom line: BlackRock looked to be slimming down just a few days ago, announcing a 3% global workforce cut, but is already back in growth mode.

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