M&A: BlackRock Acquires GIP; $12.5B Deal Emphasizes Digital and Physical Infrastructure, Decarbonization Investments

Investment giant BlackRock will acquire Global Infrastructure Partners (GIP), a fund manager that invests in digital and physical infrastructure, and the movement toward decarbonization and energy security in many parts of the world.

This is M&A deal number 25 that Sustainable Tech Partner has covered so far in 2024. See all M&A deals involving sustainability, climate tech and green IT services listed here.

BlackRock will pay $3 billion in cash and roughly 12 million shares of common stock. The deal's overall valuation is roughly $12.5 billion, Reuters reported. This is BlackRock's largest acquisition since it bought Barclay's asset management business in 2009, The Wall Street Journal noted.

The GIP purchase may allow BlackRock to compete more aggressively vs. BlackStone and Apollo Global Management in the infrastructure market, while also providing more executive candidates to potentially succeed BlackRock CEO Larry Fink, Reuters reported.

Why BlackRock Is Acquiring Global Infrastructure Partners

Global Infrastructure Partners, founded in 2006, is based in New York. The company has more than $100 billion in assets under management. GIP's key infrastructure investment areas involve:

• Digital infrastructure like fiber broadband, cell towers and data centers;
• transportation and logistical hubs such as airports, railroads and shipping ports; and
• decarbonization, water and waste, and energy security.

Dig a little deeper, and GIP's website says the company's infrastructure equity funds focus on:

• Energy, transport, digital, and water/waste infrastructure sectors;
• proprietary, proactive and selective deal origination;
• large-scale, complex transactions with limited competition;
• ability to form strategic joint ventures with leading industrial partners;
• control-oriented investments;
• high-quality businesses and assets with potential for outperformance through growth, operational value add and de-risking; and
• well-timed and disciplined entries and strategic exits.

Meanwhile, BlackRock's existing infrastructure business focuses on Diversified Infrastructure, Infra Debt, Infra Solutions, Climate Infrastructure and Decarbonization Partners.

Once the deal is completed, BlackRock's overall infrastructure business will have more than $150 billion under management. The GIP management team, led by Bayo Ogunlesi and four of its founding partners, will lead the combined infrastructure platform.

Why BlackRock Is Acquiring Global Infrastructure Partners: Executive Perspectives

In a prepared statement about the deal, BlackRock CEO Laurence D. Fink said: “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."

Fink continued: “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.”

Added GIP Founding Partner and CEO Bayo Ogunlesi: “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.”

ESG Investment Strategy Under the Microscope

BlackRock's overall business strategy has faced some pushback from ESG investment critics. A case in point: The U.S. state of Tennessee sued BlackRock in December 2023, alleging the world's largest asset manager breached consumer protection laws by making "misleading" statements about its environmental, social and corporate governance (ESG) investment strategies, Reuters reported.

BlackRock said the suit is without merit.