BlackRock and independent infrastructure fund manager Global Infrastructure Partners (GIP) have announced they have entered into an agreement for BlackRock to acquire GIP for $12.5bn, made up of $3bn in cash and approximately 12 million shares of BlackRock common stock.
BlackRock said it has a broad network of global corporate relationships as a long-term investor in both their debt and equity, and these links will help it lead critical investments in infrastructure to improve outcomes for communities around the globe and generate long-term investment benefits for clients.
The combination of GIP with BlackRock’s highly complementary infrastructure offerings creates a comprehensive global infrastructure franchise with differentiated origination and asset management capabilities it added.
The over $150bn combined business will seek to deliver clients market-leading, holistic infrastructure expertise across equity, debt and solutions at substantial scale said Blackrock. Marrying the proprietary origination and business improvement capabilities of GIP and BlackRock’s global corporate and sovereign relationships provides a platform for diversified, large-scale sourcing to support deal flow and co-investment opportunities for clients it added.
“We believe bringing GIP and BlackRock together will deliver to clients the benefits of broader origination and business improvement capabilities,” said the company.
Founded in 2006, GIP manages over $100bn in client assets across infrastructure equity and debt, with a focus on energy, transport, water and waste, and digital sectors. Its performance has been driven by proprietary origination, operational improvements, and timely exits.
Blackrock said GIP has successfully scaled its global equity flagship series, with the most recent fully invested flagship fund in 2019 surpassing $22bn.
The GIP management team, led by Bayo Ogunlesi and four of its founding partners, will lead the combined infrastructure platform. They will bring with them talented investment, and operationally focused business improvement teams with a strong track-record of building and running high-performing private markets businesses said Blackrock.
GIP’s founders and teams remain highly committed to clients, and we expect the integration with BlackRock’s broader platform will generate even greater opportunities,” said the company.
Subject to completion of customary onboarding procedures, BlackRock has also agreed to appoint GIP founding partner, chairman and chief executive Ogunlesi, to its board at the next regularly scheduled board meeting following the closing of the transaction.
“Infrastructure is one of the most exciting long-term investment opportunities, as a number of structural shifts re-shape the global economy,” said BlackRock chairman and chief executive Laurence D Fink.
“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.
“Policymakers are only just beginning to implement once-in-a-generation financial incentives for new infrastructure technologies and projects.
“I’m delighted for the opportunity to welcome Bayo and the GIP team to BlackRock, and happy to announce our plans to have Bayo join our Board of Directors post-closing.
“We founded BlackRock 35 years ago based on a unique understanding of investment risk and the factors and forces driving investment returns.
“GIP’s deep understanding of the factors and forces driving operational efficiency for long-term value creation have made them a global leader in infrastructure investing.
“Bringing these two firms together will create the infrastructure platform to deliver best-in-class investment opportunities for clients globally, and we couldn’t be more excited about the opportunities ahead of us.”
Ogunlesi added: “I’m excited about the power of this combination and the prospect of working with Larry and his talented team.
“We share with BlackRock a culture of collaboration, client focus, investment partnership, and commitment to excellence. Investors have adopted private infrastructure investing for its ability to provide stable cashflows, less correlated returns, and a hedge against inflation.
“Global corporates have turned to private infrastructure as a fast innovator and a more commercially agile owner of infrastructure assets that aren’t core to their commercial businesses.
“This platform is set to be the preeminent, one-stop infrastructure solutions provider for global corporates and the public sector, mobilizing long-term private capital through long-standing firm relationships.
“We are convinced that together we can create the world’s premier infrastructure investment firm.”