BlackRock buys Global Infrastructure Partners for $12.5 billion in Major Push

BlackRock Inc. has agreed to buy Adebayo Ogunlesi’s Global Infrastructure Partners for around $12.5 billion, propelling the world’s largest money manager into the ranks of long-term investors in energy, transportation, and digital infrastructure.

The company will pay $3 billion in cash and around 12 million shares, valued at approximately $9.5 billion at Thursday’s close, and the transaction is scheduled to finalize in the third quarter. GIP’s chairman and CEO, Ogunlesi, a former Credit Suisse executive, will join BlackRock’s board and global executive committee.

The acquisition of GIP, which manages $100 billion, is BlackRock’s largest transaction in more than a decade and a significant step forward in CEO Larry Fink’s efforts to transform the business into a leading player in the rapidly increasing market for private and alternative assets.

“The unprecedented need for new infrastructure – for digital infrastructure, upgraded logistics hubs, and decarbonization and energy security – coupled with record high government deficits means that private capital will be needed like never before,” Fink and BlackRock President Rob Kapito wrote in an email to employees. “This will be one of the fastest-growing areas of our industry over the next 10 years.”

The acquisition, announced along with BlackRock’s fourth-quarter results and a significant management shuffle on Friday, was the asset manager’s largest since its 2009 purchase of Barclays Global Investors, putting the asset manager on track to become the largest provider of exchange-traded funds.

Fink, 71, created BlackRock largely on the assumption that investors of all sizes would prefer to invest in indexes of public businesses rather than pay stock pickers. The GIP transaction represents a fresh conviction that the largest institutions will pay greater fees to invest in illiquid funds that back massive, difficult projects.

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The company is also attempting to position itself as a one-stop shop for a wide range of investment options, including alternative assets that are increasingly popular with institutional clients such as pensions, endowments, and sovereign wealth funds. While alternatives account for approximately 3% of BlackRock’s assets under management, they generate approximately 10% of fees.

In the three years to September, the firm’s assets in illiquid alternatives increased by roughly 65%, and in 2023, it purchased Kreos Capital to drive its growth in private debt.

Combining GIP with the approximately $50 billion in infrastructure assets managed by BlackRock at the end of September would result in a unit that will compete with the industry’s major players, including Macquarie Asset Management and Brookfield Asset Management. In recent years, BlackRock has invested in pipelines in the Middle East, a carbon-capture project in Texas, and a fiber network venture with AT&T Inc.

Infrastructure has been a developing sector of the alternative market as investors see potential to benefit from helping to close a $15 trillion expenditure shortfall on global infrastructure by the end of the decade, according to McKinsey analysts. That demand has held up despite recent drops in other private products, as fundraising in the region increased in 2022 while totals in private equity and real estate fell.

GIP has been a major player in that industry, owning significant holdings in some of the busiest airports, including London’s Gatwick. While infrastructure investments might include more basic projects like toll roads and bridges, major investors are increasingly seeing potential in energy-transition projects and data centers. They are drawn to the often consistent, repeating returns those assets can generate.

According to its website, Ogunlesi, 70, founded the firm in 2006 with support from General Electric Co. and Credit Suisse, and its portfolio companies have combined annual revenues of more than $80 billion. Ogunlesi is currently the lead director of Goldman Sachs Group Inc.

GIP raised a then-record $22 billion for its flagship fund, Global Infrastructure Partners IV, in 2019, and is now raising a fifth fund.

It will welcome five of GIP’s original partners. About 30% of the shares will be postponed for about five years, and BlackRock stated that the cash part will be covered by debt. BlackRock was advised by Perella Weinberg Partners, while GIP was advised by Evercore Inc.

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