BlackRock, a global asset management leader, has announced a significant acquisition of Global Infrastructure Partners (GIP) for $12.5 billion.
This move positions BlackRock at the forefront of investments in energy, transportation, and infrastructure.
The deal, set to close in the third quarter, involves BlackRock paying $3 billion in cash and issuing about 12 million shares.
Adebayo Ogunlesi, GIP’s CEO, will join BlackRock’s board, marking a major shift in the company’s leadership.
This acquisition is BlackRock’s biggest in a decade and represents CEO Larry Fink’s vision for the firm’s expansion into private and alternative assets.
Fink highlighted the growing need for private capital in infrastructure against high government deficits.
This sector to be the fastest-growing in the industry
The deal coincides with BlackRock’s profitable fourth quarter, where client assets surpassed $10 trillion.
Fink has always focused on making public company indices accessible to all investors. The GIP deal indicates a shift towards premium funds supporting large, complex projects.
BlackRock aims to be a comprehensive investment provider, focusing on alternative assets popular with institutional clients.
BlackRock’s holdings in illiquid alternatives have increased by about 65% in three years. The firm also acquired Kreos Capital to enhance its private debt offerings.
In other words, the merger with GIP’s assets will create an industry-leading entity, surpassing major competitors.
Infrastructure investments attract investors due to their potential to fill a global spending gap projected at $15 trillion.
Despite downturns in other sectors, infrastructure fundraising saw growth in 2022. GIP has been instrumental in this sector, with notable investments in major global infrastructures.
Ogunlesi, GIP’s founder, leads a portfolio with over $80 billion in annual revenues. Post-acquisition, five GIP founding partners will join BlackRock.
In addition, the firm plans to issue debt for the cash portion of the deal and defer some shares.
Perella Weinberg Partners and Evercore Inc. advised BlackRock and GIP, respectively, on this strategic acquisition.