BlackRock Buys Infrastructure Firm for $12.5B in Big Alternatives Push

While alternatives currently account for roughly 3% of BlackRock’s assets under management, they bring in about 10% of fees.

The firm’s assets in illiquid alternatives jumped about 65% in the three years through September, and in 2023 it acquired Kreos Capital to fuel its growth in private debt.

Combining GIP with the roughly $50 billion of infrastructure assets that BlackRock managed at the end of September will create a unit to rival the industry’s largest players, including Macquarie Asset Management and Brookfield Asset Management.

In recent years, BlackRock participated in multibillion-dollar investments 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 growing corner of the alternatives market as investors see opportunities to profit from helping to fill what consultants at McKinsey project will be a $15 trillion spending gap on global infrastructure through the end of the decade.

That demand held up even during recent dips in other private products, as fundraising in the area rose in 2022 while private equity and real estate’s totals slumped.

GIP’s Focus

GIP has been among the biggest players in that world, taking notable stakes in some of the busiest airports, including London’s Gatwick.

While infrastructure bets can include more mundane projects such as toll roads and bridges, investing giants have also increasingly seen opportunities in energy-transition projects and data centers. They’re drawn by the typically stable, recurring returns those assets can generate.

Ogunlesi, 70, launched the firm in 2006 with backing from General Electric Co. and Credit Suisse, and its portfolio companies have combined annual revenues of more than $80 billion, according to its website. Ogunlesi currently serves as Goldman Sachs Group Inc.’s lead director.

In 2019, GIP raised a then-record $22 billion for a flagship fund, Global Infrastructure Partners IV, and recently has been raising a fifth fund.

Five of GIP’s founding partners will join BlackRock. About 30% of the shares will be deferred for about five years, and BlackRock said it will issue debt to cover the cash portion. Perella Weinberg Partners advised BlackRock, while Evercore Inc. was lead adviser for GIP.

Credit: Bloomberg