BlackRock, Inc. (NYSE: BLK), a leading financial institution, and Global Infrastructure Partners (GIP), a prominent independent infrastructure fund manager, have jointly announced a monumental agreement. BlackRock will acquire GIP for a total consideration of $3 billion in cash and approximately 12 million shares of BlackRock common stock. This acquisition marks a significant step in the expansion of BlackRock’s infrastructure investment capabilities.

Infrastructure Market: A Trillion-Dollar Opportunity

The infrastructure sector, currently valued at $1 trillion, is anticipated to be one of the fastest-growing segments of private markets. Several long-term structural trends, including the demand for upgraded digital infrastructure (such as fiber broadband, cell towers, and data centers), investment in logistical hubs, and a global push toward decarbonization and energy security, are driving this growth.

The Need for Public-Private Partnerships

Given large government deficits, the mobilization of capital through public-private partnerships has become crucial for funding essential infrastructure. Additionally, in a higher interest rate environment where capital has become more scarce, companies are increasingly seeking partnerships for their embedded infrastructure assets to enhance returns on invested capital or raise capital for reinvestment in their core businesses.

Combining Strengths for Global Impact

The amalgamation of GIP with BlackRock’s infrastructure offerings creates a comprehensive global infrastructure franchise. This combined business, valued at over $150 billion, aims to deliver market-leading infrastructure expertise across equity, debt, and solutions. The synergy of GIP’s proprietary origination capabilities and BlackRock’s global corporate and sovereign relationships will provide a diversified platform for large-scale sourcing, supporting deal flow, and co-investment opportunities.

GIP’s Proven Track Record

GIP, founded in 2006, manages over $100 billion in client assets across infrastructure equity and debt, focusing on sectors such as energy, transport, water and waste, and digital industries. GIP’s success has been attributed to proprietary origination, operational improvements, and timely exits, including significant investments in major renewables platforms and transport infrastructures.

BlackRock’s Infrastructure Expertise

BlackRock’s over $50 billion of infrastructure client AUM includes equity, debt, and solutions, demonstrating growth since its inception in 2011. The company’s investment franchises cover Diversified Infrastructure, Infrastructure Debt, Infrastructure Solutions, Climate Infrastructure, and Decarbonization Partners.

Leadership and Future Prospects

The GIP management team, led by Bayo Ogunlesi and four founding partners, will spearhead the combined infrastructure platform. Their investment and operationally focused teams bring a strong track record of building and running high-performing private markets businesses. BlackRock has also agreed to appoint Bayo Ogunlesi to its Board at the next regularly scheduled board meeting following the transaction’s closing.

Statements from the Leadership

Laurence D. Fink, Chairman and CEO of BlackRock, highlighted the significance of infrastructure as a long-term investment opportunity and the anticipated acceleration in both physical and digital infrastructure investment globally. Bayo Ogunlesi, GIP Founding Partner, Chairman, and CEO, expressed excitement about the combination’s potential, emphasizing the shared culture of collaboration, client focus, and investment partnership between the two firms.

Transaction Terms and Advisory Roles

The transaction includes $3 billion in cash and approximately 12 million shares of BlackRock common stock, with a portion of the stock consideration deferred and subject to certain post-closing events. BlackRock plans to fund the cash consideration through additional debt, maintaining its strong credit rating. The deal is expected to close in the third quarter of 2024, subject to regulatory approvals and other closing conditions.

Perella Weinberg Partners and Evercore served as lead financial advisors to BlackRock and GIP, respectively, with legal counsel provided by Skadden, Arps, Slate, Meagher & Flom, Fried, Frank, Harris, Shriver & Jacobson LLP, Kirkland & Ellis LLP, and Debevoise & Plimpton LLP.

This acquisition marks a significant moment in the financial world, with BlackRock and GIP poised to create a leading infrastructure investment firm, demonstrating a strong commitment to sustainable development and global infrastructure growth.

  Bayo Ogunlesi, BlackRock, Global Infrastructure Partners, Laurence D. Fink