BlackRock and Global Infrastructure Partners (GIP) – a leading independent infrastructure fund manager – jointly announced that they have entered into an agreement for BlackRock to buy GIP for a total consideration of $3 billion of cash and approximately 12 million shares of BlackRock common stock.
A $1 trillion market today, infrastructure is expected to be one of the fastest-growing segments of private markets in the years ahead. And several long-term structural trends support an acceleration in infrastructure investment. These include increasing global demand for upgraded digital infrastructure such as 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.
Plus, large government deficits mean that capital mobilization through public-private partnerships will be critical for funding important infrastructure. 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.
BlackRock has a vast network of global corporate relationships as a long-term investor in their debt and equity. And these relationships will help us lead critical investments in infrastructure to improve outcomes for communities around the globe and generate long-term investment benefits for clients.
Combining GIP with BlackRock’s complementary infrastructure offerings creates a comprehensive global infrastructure franchise with differentiated origination and asset management capabilities. The $150+ billion combined business will seek to deliver clients market-leading and holistic infrastructure expertise across equity, debt, and solutions at a substantial scale. Combining 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. The firm believes bringing GIP and BlackRock together will deliver to clients the benefits of broader origination and business improvement capabilities.
Launched in 2006, independent infrastructure investor GIP manages over $100 billion in client assets across infrastructure equity and debt, focusing on energy, transport, water and waste, and digital sectors. And GIP’s performance has been driven by proprietary origination, operational improvements, and timely exits. They have successfully scaled their global equity flagship series, with the most recent fully invested flagship fund in 2019 surpassing $22 billion.
BlackRock’s $50+ billion infrastructure client AUM comprises infrastructure equity, debt, and solutions and has grown organically and inorganically since its inception in 2011. The top investment talent at BlackRock leads franchises that include Diversified Infrastructure, Infra Debt, Infra Solutions, Climate Infrastructure, and Decarbonization Partners.
The GIP management team, led by Bayo Ogunlesi and four of its founding partners, will lead the combined infrastructure platform. And they will bring talented investment and operationally focused business improvement teams with a strong record of building and running high-performing private markets businesses. GIP’s founders and teams remain highly committed to clients, and they expect the integration with BlackRock’s broader platform will generate even greater opportunities.
Subject to the completion of customary onboarding procedures, BlackRock has agreed to appoint Bayo Ogunlesi, GIP Founding Partner, Chairman, and Chief Executive Officer, to the Board at the next regularly scheduled board meeting following the transaction’s closing.
Terms of the Deal
Under the terms of the deal, BlackRock will acquire 100% of the business and assets of GIP for a total consideration of $3 billion in cash and approximately 12 million shares of BlackRock common stock.
About 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 plans 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 change its leverage profile meaningfully. A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.
This 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. And the deal is expected to close in the third quarter of 2024 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 LLP acting as legal counsel. Evercore served as lead financial advisor, and Kirkland & Ellis LLP and Debevoise & Plimpton LLP acted as legal counsel to GIP.
KEY QUOTES:
“Infrastructure is one of the most exciting long-term investment opportunities, as a number of structural shifts re-shape the global economy. 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.”
— Laurence D. Fink, BlackRock Chairman and CEO
“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.”
— Bayo Ogunlesi, GIP Founding Partner, Chairman, and CEO
