Giant private asset manager BlackRock is aiming to fuel growth with a major push into infrastructure ownership and investment, announcing an agreement this week to acquire for $12.5 billion Global Infrastructure Partners—the world’s largest independent infrastructure investor in the energy, transportation, digital and water sectors with about $106 billion in assets managed.
The cash and stock deal between the two New York City-based investment managers, set to close in the third quarter this year if it can gain U.S. government antitrust approval, would create an estimated $150-billion infrastructure investment platform, said a Jan. 12 announcement. Blackrock manages a portfolio of more than $10 trillion in mostly financial assets.
Spokespersons for the firms did not respond to ENR queries related to the deal.
Global Infrastructure Partners has invested in U.S. megaprojects such as Next Decade’s Rio Grande LNG terminal in Brownsville, Texas, and taken stakes in airports in England and Australia. Market observers see big demand for logistics and digital infrastructure, and trillions of dollars needed for the lower-carbon energy transition, which “have made the asset class increasingly popular among institutional investors,” said Reuters. Consultant McKinsey projects a $15-trillion spending gap on global infrastructure through 2030.
Construction of the $18.4-billion Texas LNG project’s first three liquefaction trains was awarded last year to Bechtel Energy under a $12-billion lump-sum turnkey EPC contract. Global Infrastructure Partners is a $5.9-billion investor in the project and also has a stake in Freeport LNG in Texas, which has received all regulatory approvals to build a fourth liquefaction train, despite a setback caused by a 2022 explosion that halted production for months. The plant’s electric drive motors will reduce carbon emissions by over 90% relative to gas turbine-driven liquefaction facilities, Freeport LNG says.
'Long Term Investment Opportunities'
BlackRock sees infrastructure as “one of the most exciting long-term investment opportunities,” Chairman Laurence Fink told investors. “The expansion of both physical and digital infrastructure will continue to accelerate as governments prioritize self-sufficiency and security.” He said the link with Global Infrastructure Partners will create the second largest private markets infrastructure manager. Brookfield Asset Management is believed to be larger. Macquarie is another major player in the sector.
Observers point to added federal incentives under the US Inflation Reduction Act and Chips and Science Act. “Infrastructure is the asset class that is going to capture most of the fundraising for the energy transition,” Alex Murray, a sector researcher told the Financial Times. Private infrastructure investment leader Brookfield provided $15 billion this year to fund Intel's $30-billion semiconductor fab plant in Arizona, the publication said.
BlackRock is a separate entity from Blackstone, another major private investment firm also growing in the infrastructure sector, with the two part of the same corporate ownership until 1988. In its latest quarterly results report in October, Blackstone's infrastructure unit reached nearly $40 billion in assets and would reach $100 billion “over time," said president Jonathan Gray, adding that its portfolio grew 28% in the last 12 months.
Global Infrastructure Partners portfolio will combine with the estimated $50 billion of infrastructure assets that BlackRock managed as of last year to create an entity that also could generate higher fees from institutional clients such as pensions, endowments and sovereign wealth funds, media reports say.
In July, Global Infrastructure Partners agreed to acquire a 40% interest in TC Energy’s Columbia Gas Transmission system. The companies will jointly invest in annual maintenance, as well as reliability and increased capacity upgrades. The investor is expected to spend more than $1.3 billion over three years. It also has a joint venture with Hess Midstream Partners, which owns oil and gas assets in the North Dakota Bakken shale region. Other U.S. investments include the 1,700-MW Bluepoint Wind offshore wind project in the New York Bight area. The investment firm and TotalEnergies formed a strategic partnership in 2022 to support renewable energy projects in the U.S.
Stakes in Energy Transition Project
Global Infrastructure Partners also has invested in carbon capture through its portfolio company EnLink Midstream, which has 4,000 miles of pipelines in Louisiana and an agreement with CF Industries to capture and permanently store up to 2 million metric tons of carbon dioxide for ExxonMobil. Startup is scheduled for early 2025.
The infrastructure giant owns 40% of Terra-Gen Power, which has 23 wind farms in the western U.S. and New York. It also has 1,500 MW of battery storage in California with another 1,000 MW now under construction.
"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," said Global Infrastructure Partners founder and CEO Adebayo Ogunlesi, who founded the firm in 2006 and also is chair of President Joe Biden’s National Infrastructure Advisory Council.
He added that "investors have adopted private infrastructure investing for its ability to provide stable cashflows, less correlated returns, and a hedge against inflation. 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."