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Blackrock to acquire GIP for over USD 12.5bn

BlackRock Inc is buying Global Infrastructure Partners (GIP) in a deal worth more than USD 12.5bn, a move that will triple BlackRock’s infrastructure assets and create one of the world’s biggest infrastructure managers.

The firms announced today that BlackRock has agreed to buy GIP for USD 3bn in cash plus around 12 million common shares.

The firm’s shares rose on the news, trading at USD 802 per share at the market open, a roughly 1% jump from USD 792 at yesterday’s close.

The acquisition will create an infrastructure platform with more than USD 150bn of assets under management (AuM), with the addition of GIP’s more than USD 106bn AuM to BlackRock’s existing USD 50bn AuM comprising infrastructure equity and debt, the asset managers said today.

The takeover price represented a multiple of about 25-29x GIP’s fee-related earnings expected for 2024, excluding a USD 650m retention payment for GIP employees and future carry. This is in line with valuations of 25x-35x for other private markets firms, according to BlackRock.

GIP Founding Partner, Chairman and Chief Executive Adebayo O. Ogunlesi will lead the enlarged infrastructure platform alongside President and COO Raj Rao and Founding Partner and Deputy Chairman Michael McGhee.

BlackRock has also agreed to appoint Ogunlesi to its board following the closing of the transaction, the investor said in its statement.

BlackRock Global Head of Infrastructure & Real Estate Anne Valentine Andrews has decided to leave the firm to pursue another opportunity. “Anne played an important role in developing BlackRock’s infrastructure and real estate businesses,” a company spokesperson told Infralogic. “She will continue as an advisor to the firm in the months ahead.”

Other BlackRock executives like Mark Florian, who leads the company’s diversified infrastructure equity platform; and David Giordano, who leads the climate infrastructure division; will continue in their roles, a source familiar with the situation told Infralogic.

Speaking by phone with Infralogic, Ogunlesi said the deal will combine largely complementary infrastructure businesses.

“BlackRock focuses mostly on mid-cap transactions, GIP on large cap. BlackRock has a good debt offering, mostly investment grade, while GIP targets deals below investment grade,” said Ogunlesi.

GIP’s major portfolio assets around the world include London Gatwick, Edinburgh and Sydney Airports, French-based environmental group Suez and Port of Melbourne in Australia and Peel Ports in the UK. Its equity funds target core and core-plus infrastructure. Founded in 2006, GIP in 2015 launched an infrastructure debt strategy. GIP in 2015 launched an infrastructure debt strategy.

BlackRock’s private infrastructure equity offering has traditionally focused on energy, power and renewables ever since acquiring the First Reserve energy infrastructure franchise in 2017. More recently it has expanded its focus to target other sectors including transport and digital infrastructure with its latest fund, BlackRock Global Infrastructure Fund IV, which has raised USD 5.1bn to date, according to Infralogic data.

BlackRock’s fund portfolio will be combined with GIP’s offering under the GIP management team.

Discussing the merger, a BlackRock executive said on the firm’s 4Q23 earnings call today that “GIP is in late stages of raising its latest fund.”

The fund, Global Infrastructure Partners V (GIP V), was launched in 2022 and has a USD 25bn target, according to Infralogic data.

GIP executives are keeping 100% of carried interest of existing funds and future interest will be split 60:40 between GIP and Blackrock executives, an executive said on the call.

BlackRock added it plans to raise debt to finance the USD 3bn cash payment needed to buy GIP.

Ogunlesi said both he and BlackRock’s CEO Larry Fink think that we are about to enter a “golden age” of private capital.

“The primary themes that highlight infrastructure’s importance, and where there’s a huge demand for incremental investment, include: the demand for data, the emergence of AI, nearshoring (ports, railroads and airports), the energy transition, renewables, energy security and LNG demand. At a time when governments do not have the capital, private capital has the funds to fill this gap,” he said.

BlackRock said in its press release that infrastructure is a USD 1trn market today and is forecast to be one of the fastest growing segments of private markets in the years ahead.

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 to GIP, while Kirkland & Ellis and Debevoise & Plimpton acted as legal counsel.

BlackRock’s acquisition of GIP is by far the largest deal amid a wave of consolidation among infrastructure fund managers.

Other GPs to trade recently include DIF Capital Partners, which was acquired by CVC in September 2023 in a deal reportedly worth EUR 1bn (USD 1.1bn).

In 2022, DigitalBridge agreed to buy the global infrastructure equity investment management business of AMP Capital for USD 328m, taking over some USD 5.5bn of fee-earning AuM.

Also, the Financial Times reported on 20 December that US private equity firm General Atlantic is in talks with emerging markets investor Actis over a possible acquisition that would add USD 12.7bn to General Atlantic’s USD 77bn of AuM.

Past acquisitions of GPs
Country GP sold/up for sale Acquired by Date Deal value
Netherlands DIF Capital Partners CVC Capital Partners Sep-23* EUR 1bn
UK Gresham House Searchlight Capital Partners Jul-23* GBP 440.6m
Australia AMP Capital DigitalBridge Feb-23 USD 316m
Australia Infrastructure Capital Group Foresight Group Sep-22 AUD 168.55m
UK Greencoat Capital Schroders Apr-22 GBP 358m
UK Whitehelm Capital Patrizia AG Feb-22 EUR 67m
France Antin Infrastructure Partners Various (IPO) Sep-21 EUR 550m
UK Glennmont Partners Nuveen Mar-21 Unknown
UK Gravis Capital Management Orix Corporation Feb-21 Unknown
UK Pensions Infrastructure Platform Foresight Group Aug-20 Unknown
UK InfraRed Capital Partners SunLife Financial Jul-20 Unknown
US Oaktree Capital Management Brookfield Asset Management Sep-19 CAD 4.7bn
*date announced
Source: Infralogic

Jonathan Carmody, Rory Gallivan, Stefano Berra and Matt O’Brien