BlackRock, Inc. and Global Infrastructure Partners, a leading independent infrastructure fund manager, have today jointly announced  that they have entered into an agreement for BlackRock to acquire will acquire 100% of the business and assets of GIP for a total consideration of $3 billion of cash and approximately 12 million shares of BlackRock common stock worth about $9.5 billion at Thursday’s close.

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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.

A joint announcement issued by the companies says:

“Large government deficits mean that the mobilization of capital through public-private partnerships will be critical for funding important infrastructure. Finally, 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….

“The over $150 billion combined business will seek to deliver clients market-leading, holistic infrastructure expertise across equity, debt and solutions at substantial scale.”

Founded in 2006, world leading independent infrastructure investor 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. They have successfully scaled their global equity flagship series, with the most recent fully invested flagship fund in 2019 surpassing $22 billion.

BlackRock’s over $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. Top investment talent at BlackRock lead 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. 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.

“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.

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, with a targeted focus on real infrastructure assets in the transport, energy, digital, and water and waste sectors.

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 – the transaction is not expected to meaningfully change its leverage profile.

BlackRock's holdings in the UK water sector include Pennon, Severn Trent, United Utilities and Bristol Water. Global Infrastructure Partners' UK investment portfolio includes Biffa, Edinburgh Gatwick and London City airports, Great Yarmouth Port, Hornsea 1 offshore wind farm project and Peel Ports.