BlackRock entered an agreement to acquire Global Infrastructure Partners, an independent infrastructure fund manager, for total consideration of $3 billion of cash and approximately 12 million shares of BlackRock common stock. Approximately 30% of the total consideration, all in stock, will be deferred and is expected to be issued in approximately five years, subject to the satisfaction of certain post-closing events.
BlackRock intends to fund the cash consideration through $3 billion of additional debt. BlackRock is currently rated AA- with S&P and Aa3 with Moody’s, and this transaction is not expected to meaningfully change its leverage profile.
The deal is expected to be modestly accretive to BlackRock’s as-adjusted earnings per share and operating margin in the first full year post-close. The transaction is expected to close in Q3/24, subject to customary regulatory approvals and other closing conditions.
Perella Weinberg Partners served as lead financial advisor to BlackRock, with Skadden, Arps, Slate, Meagher & Flom and Fried, Frank, Harris, Shriver & Jacobson acting as legal counsel. Evercore served as lead financial advisor and Kirkland & Ellis and Debevoise & Plimpton acted as legal counsel to GIP.
A $1 trillion market today, infrastructure is forecast to be one of the fastest growing segments of private markets in the years ahead. Multiple long-term structural trends support an acceleration in infrastructure investment, including increasing global demand for upgraded digital infrastructure like fiber broadband, cell towers and data centers; renewed investment in logistical hubs, such as airports, railroads and shipping ports as supply chains are rewired; and a movement toward decarbonization and energy security in many parts of the world.
Further, large government deficits mean that the mobilization of capital through public-private partnerships will be critical for funding important infrastructure. Finally, as capital has become more scarce in a higher interest rate environment, companies are exploring partnership opportunities for their embedded infrastructure assets to improve their returns on invested capital or to raise capital to reinvest in their core businesses.
The combination of GIP with BlackRock’s infrastructure offerings will create a more than $150 billion combined business that will seek to deliver clients infrastructure expertise across equity, debt and solutions at scale.
Founded in 2006, GIP manages more than $100 billion in client assets across infrastructure equity and debt, with a focus on energy, transport, water and waste, and digital sectors. GIP’s performance has been driven by proprietary origination, operational improvements and timely exits. The company has scaled its global equity flagship series, with the most recent fully invested flagship fund in 2019 surpassing $22 billion.
BlackRock’s more than $50 billion of infrastructure client assets under management is comprised of infrastructure equity, debt and solutions, and has grown both organically and inorganically since inception in 2011. BlackRock leads franchises that include Diversified Infrastructure, Infra Debt, Infra Solutions, Climate Infrastructure and Decarbonization Partners.
The GIP management team, led by Bayo Ogunlesi (founding partner, chairman and CEO of GIP) and four of its founding partners, will lead the combined infrastructure platform. They will bring with them investment and business improvement teams with a track record of building and running private markets businesses. Subject to completion of customary onboarding procedures, BlackRock has also agreed to appoint 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 reshape the global economy,” Laurence D. Fink, chairman and CEO of BlackRock, said. “We believe the expansion of both physical and digital infrastructure will continue to accelerate as governments prioritize 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.”
“I’m excited about the power of this combination and the prospect of working with Larry and his talented team,” Ogunlesi said. “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 longstanding firm relationships. We are convinced that together we can create the world’s premier infrastructure investment firm.”