Blackrock Inc. has agreed to acquire Bayo Ogunlesi’s Infrastructure firm, Global Infrastructure Partners (GIP) for US$12.3bn.
The acquisition of GIP, which has about US$106bn in assets under management, would make BlackRock the world’s second-largest infrastructure manager, after Macquaire.
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Founded in 2006 by former executives at Credit Suisse and others, GIP is the world’s largest independent infrastructure manager with over US$100 billion in assets under management.
GIP manages over $100 billion in client assets across infrastructure equity and debt, with a focus on energy, transport, water and waste, and digital sectors.
GIP’s prime assets include Sydney and London Gatwick airports, the Port of Melbourne and the Suez water group, extensive green energy holdings and a stake in a big shale oil pipeline.
In a statement on Friday, BlackRock and GIP jointly announced that “they have entered into an agreement for BlackRock to acquire GIP for total consideration of $3 billion of cash and approximately 12 million shares of BlackRock common stock.”
Under the terms of the transaction, BlackRock will acquire 100% of the business and assets of GIP for total consideration of $3 billion in 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. A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.
BlackRock’s over US$50 billion of infrastructure client asset under management is comprised of infrastructure equity, debt and solutions, and has grown both organically and inorganically since inception in 2011.
The combination of GIP with BlackRock’s highly complementary infrastructure offerings creates a comprehensive global infrastructure franchise with differentiated origination and asset management capabilities.
The over $150 billion combined business will seek to deliver clients market-leading, holistic infrastructure expertise across equity, debt and solutions at substantial scale.
The GIP management team, led by Bayo Ogunlesi and four of its founding partners, will lead the combined infrastructure platform.
BlackRock has also 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 closing of the transaction.
Larry Fink, BlackRock’s founder, has been openly hunting for a transformational deal along the lines of the 2009 purchase of BGI from Barclays that gave BlackRock a dominant position in passive investing and helped make it the world’s largest money manager. His courting of GIP, long considered one of the crown jewel platforms in the alternatives industry, started in September, as BlackRock sought to capitalise on rapidly rising demand for long-term investment funds focused on decarbonisation, energy security and power grids.
A $1 trillion market today, infrastructure is forecast to be one of the fastest growing segments of private markets in the years ahead. A number of long-term structural trends support an acceleration in infrastructure investment. These include 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.
“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,” said Laurence D. Fink, BlackRock Chairman and CEO.
“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. 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,” said Bayo Ogunlesi, GIP Founding Partner, Chairman, and CEO. “We are convinced that together we can create the world’s premier infrastructure investment firm.”
GIP Profile
GIP is the largest independent infrastructure manager by assets under management globally, with over $100 billion in AUM across infrastructure equity and credit strategies supported by approximately 400 employees. Its over 40 portfolio companies generate over $75 billion in annual revenue and employ approximately 115,000 people around the world. GIP’s success has been driven by its targeted focus on real infrastructure assets in the transport, energy, digital, and water and waste sectors. GIP’s in-depth knowledge of target industries underpins its ability to originate proprietary transactions through outright ownership and corporate joint ventures, conduct deep and extensive diligence, and structure investments.
In addition to proprietary origination, business improvement is a key pillar of GIP’s infrastructure approach, with a dedicated team delivering deep operational enhancements. GIP has executed successful exits across multiple channels. Among GIP’s investments are Gatwick, Edinburgh, and Sydney Airports, CyrusOne (data centers), Suez (water and waste), Pacific National and Italo (rail), Peel Ports and Port of Melbourne, and several major renewables platforms, including Clearway, Vena, Atlas and Eolian.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur
