BlackRock continued its expansion into alternative investments by announcing Friday that it was buying one of the world’s largest infrastructure private equity firms, Global Infrastructure Partners, for $12.5 billion.
The deal, expected to close in the third quarter, is composed of $3 billion in cash and 12 billion shares of BlackRock common stock, which were priced at $800 per share Friday afternoon. 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, according to information from BlackRock about the acquisition.
“Infrastructure is a $1 trillion market forecasted to be one of the fastest-growing segments of private markets in the years ahead,” BlackRock CEO Larry Fink said during an earnings call, where the deal was unveiled. Alts now amount to just 3% of BlackRock’s assets but bring in 10% of its fees, according to Bloomberg.
The GIP acquisition is BlackRock’s biggest since its 2009 buyout of Barclays Global Investors, which made Fink’s firm the largest provider of exchange-traded funds. GIP has about $100 billion in assets, which will supplement BlackRock’s $47 billion in infrastructure holdings. BlackRock’s total assets under management are $9.1 trillion.
Based in New York City like BlackRock, GIP was founded in 2006, with Credit Suisse and General Electric as initial investors in its first fund, which raised $5.6 billion. Two of GIP’s notable investments are Gatwick Airport and Edinburgh Airport in the U.K. GIP has numerous energy holdings, such as ADNOC Gas Pipelines and Terra-Gen, an energy company.
The deal sparked hope among some on Wall Street that it might be a sign that the long merger drought was over.
“There have been very few deals [recently],” says Kevin Gallagher, a principal at consulting firm Casey Quirk. The ones over the past year have been very small or distressed scenarios, he noted, such as UBS’s takeover of woebegone Credit Suisse. A tie-up like the BlackRock-GIP transaction could mean the merger scene might get busier, he suggested.
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Tags: acquisitions, Alts, Assets, Barclays, BlackRock, Global Infrastructure Partners, Infrastructure