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  • Writer's pictureDanny North

Charting a New Course: BlackRock's GIP Deal and the Changing Landscape of Private Capital"

BlackRock, the global asset management giant, recently unveiled its strategic move to acquire Global Infrastructure Partners (GIP) for $12.5 billion. This landmark acquisition could redefine BlackRock's position in the private markets, particularly in infrastructure investments.

The deal's swift progress, initiated after an October dinner meeting between BlackRock CEO Larry Fink and GIP founder Adebayo Ogunlesi, comes after a Larry Finks long pursuit of trying to find a suitable private market partner to enhance BlackRock’s presence in alternative investments.

The compromise struck between BlackRock and GIP involves a distribution of fees and ownership shares, aiming to balance the interests of both entities. The acquisition is structured with a $3 billion cash component and 12 million BlackRock shares, making the GIP team collectively the second-largest shareholder in BlackRock. The deal includes BlackRock receiving 100% of management fees on GIP funds and 40% of performance fees from future funds, while GIP employees retain 100% of the carried interest in existing and upcoming funds.

Founded in 2006 by Adebayo Ogunlesi and other key figures, GIP has grown into a powerhouse managing over $100 billion in assets, including strategic holdings in airports, ports, green energy, and pipelines. The success of GIP lies in its adept ability to acquire, revitalize, and sell assets, with a diverse portfolio that includes Gatwick Airport and the Suez Wastewater group.

This acquisition holds transformative potential for BlackRock. The deal, largely culminating from Fink’s and Ogunelsi’s shared visions of infrastructure investments being the fastest-growing part of private markets, has propelled Blackrock into the position of the world's second-largest infrastructure investor. Fink has emphasized that this move will help feed demand for infrastructure from sovereign wealth and high-net-worth individuals, diversify Blackrock’s revenues, and generate greater earnings for shareholders.

Thus, this move is seen by many as a crucial step for BlackRock to compete with industry giants like Blackstone and Apollo Global Management.

The deal has had and will likely continue to have sector-wide implications. Other independently owned firms in the private capital sector, including CVC Partners and General Atlantic considering partnerships or public listings; so, they too, can expand further into various investment areas, responding to the ever-changing market dynamics and growth prospects.

Ultimately, the strategic move reflects BlackRock's determination to reshape its role in private markets, specifically in infrastructure investments in response to the evolving market landscape. The significance lies not just in the deal itself but in the broader implications it carries for the future of private capital.


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