BlackRock chief executive Larry Fink has been searching for years for the right private markets partner to make his $10tn money manager as formidable a player in alternative investments as it is in traditional asset management.
On Friday, he announced a transaction that may do just that. BlackRock has struck a deal to buy Global Infrastructure Partners for more than $12.5bn in cash and stock, a move that will substantially boost its footprint in alternative assets.
Acquiring GIP, which has about $106bn in assets under management, will make BlackRock the world’s second-largest manager of private infrastructure assets, and bolster the leadership of its alternatives business.
Fink 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.
But his overtures to private equity, private credit and hedge funds rarely got beyond the first meal, write my colleagues Brooke Masters and Antoine Gara in this analysis. Often the cultures or business models clashed. When the alternatives titans got intrigued by the idea of a tie-up, they proved unwilling to give BlackRock the majority control it wanted.
Global Infrastructure Partners was different. When Fink and GIP founder Adebayo Ogunlesi met for an October dinner at Fasano, an Italian restaurant steps away from Rockefeller Center in New York, the menu included plans for a combination that could shake up the investment management industry.
Ogunlesi had built GIP in less than two decades into one of the standout firms in the lucrative private investment industry. With just 400 people, his infrastructure investment outfit had grown to hold $106bn in assets including stakes in airports in Sydney and London, ports, green energy and large pipelines.
Fink and Ogunlesi, who met when they worked at First Boston before it was bought by Credit Suisse in the 1980s, shared a vision that infrastructure investments would be the fastest-growing part of the private markets in the coming years.
They also believed that private capital, an industry started decades ago by small teams of mercenary dealmakers, was entering a phase of consolidation in which size, resources and the ability to win access to the world’s largest companies would be paramount.
Fink told analysts on Friday that the combination would feed and meet growing demand for infrastructure from sovereign wealth funds and rich individuals.
“BlackRock and GIP will be able to connect our clients with bigger and better opportunities while also accelerating growth, diversifying revenues and generating earnings for our shareholders,” he said. “We could not be more excited.”
Read the full analysis of how the deal came about here. And don’t miss Antoine and Brooke’s profile of Ogunlesi, who rose to head investment banking at Credit Suisse before founding GIP in 2006.
This article was written by Harriet Agnew and Asset Management Editor from The Financial Times and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.