BlackRock to Buy Global Infrastructure Partners for $12.5 Billion to Boost Alts Business
Posted on 01/12/2024
BlackRock, Inc. (NYSE: BLK) agreed to acquire Global Infrastructure Partners (GIP), a major infrastructure fund manager. The transaction is being broken down into a total consideration of US$ 3 billion of cash and approximately 12 million shares of BlackRock common stock.
BlackRock is aiming to boost its business in real assets, especially infrastructure. Founded in 2006, GIP manages over US$ 100 billion in client assets across infrastructure equity and debt, with a focus on energy, transport, water and waste, and digital sectors. GIP’s performance has been driven by proprietary origination, operational improvements, and timely exits. They have scaled their global equity flagship series, with the most recent fully invested flagship fund in 2019 surpassing US$ 22 billion. 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. GIP was established in May 2006. Two founding investors in its first fund, GIP I, were Credit Suisse and General Electric. Both committed approximately 9% of the US$ 5.64 billion of GIP I’s committed capital. At the time, the GE (GE Infrastructure) and Credit Suisse formed the US$1 billion joint venture to invest in global infrastructure assets. In February 2013, Credit Suisse agreed to sell its stake in the first fund of Global Infrastructure Partners to Lexington Partners Inc.
BlackRock’s over US$ 50 billion of infrastructure client AUM is comprised of infrastructure equity, debt and solutions, and has grown both organically and inorganically since inception in 2011.
The GIP management team, led by Bayo Ogunlesi and four of its founding partners, will lead the combined infrastructure platform. Subject to completion of customary onboarding procedures, 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.
Terms of the Transaction
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.
The 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.
The transaction is expected to close in the third quarter of 2024 subject to customary regulatory approvals and other closing conditions.
Advisors
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.
