BlackRock said on Friday it would buy Global Infrastructure Partners (GIP) for $12.5 billion in a major bet on alternative assets and announced a shake-up of its top management.
The deal, which includes $3 billion in cash and 12 million BlackRock shares, will put the asset management giant at the heart of investing in ports, power, and digital infrastructure projects around the globe.
Once the deal closes, the firm will hold approximately $150 billion in infrastructure assets across a portfolio that ranges from the U.S. liquefied natural gas export market to wastewater services in France to airports in England and Australia.
Soaring demand for logistics and digital infrastructure, and the trillions of dollars needed for the transition away from high-carbon energy, have made the asset class increasingly popular among institutional investors.
“Infrastructure is one of the most exciting long-term investment opportunities, as a number of structural shifts re-shape the global economy," said chief executive Larry Fink.
BlackRock, which manages $10 trillion across all markets, has been on the hunt for what it hopes will be a transformative deal as its revenues stagnated and its environmental, social, and corporate governance business came under political attacks in the United States.
"This is [Fink's] chance to put his final fingerprint on the company" and allow it to compete with firms such as BlackStone and Apollo Global Management, said Kyle Sanders, an analyst at Edward Jones, who has a buy rating on the stock.
Founded in 2006, GIP manages more than $100 billion in assets and has a portfolio including Britain's Gatwick airport, the Port of Melbourne and major offshore wind projects.
Management Changes
BlackRock also unveiled changes to its senior management structure, at a time when speculation has been growing over who will succeed Fink, who founded BlackRock in 1988.
Stephen Cohen becomes chief product officer and will lead a new global product strategy group, while Salim Ramji, global head of iShares and index investments, is leaving, according to a company memo seen by Reuters.
BlackRock is also creating a new international business structure under Rachel Lord to lead Europe, the Middle East, India, and Asia Pacific, the memo said.
Five of GIP's founding partners will join BlackRock, including GIP Chairman Bayo Ogunlesi, who will also join BlackRock's board of directors following closure of the deal, it added.
Ogunlesi will step down from Goldman Sachs' board following his move to BlackRock, Goldman CEO David Solomon said on Friday.
The deal adds "new contenders" to the list of candidates to succeed Fink, who at 71 has yet to name his eventual replacement, said Cathy Seifert, an analyst at CFRA.
"As alternative assets become an increasingly important part of BlackRock’s business mix, the next leader’s private asset skill set will become more important," she said.
Profit Beat
BlackRock also reported an 8% rise in quarterly profit, helped by a rebound in markets that boosted its assets under management.
Hopes of a soft landing for the U.S. economy - a scenario where inflation eases without a sharp rise in unemployment - have cheered markets in recent months.
A dovish tilt from the U.S. Federal Reserve, which has left interest rates unchanged since July, has also boosted sentiment, helping BlackRock end the fourth quarter with $10.01 trillion in assets under management (AUM), up from $8.59 trillion a year earlier.
On an adjusted basis, BlackRock earned $1.45 billion, or $9.66 per share, for the three months ended Dec. 31, compared with $1.36 billion, or $8.93 per share, a year earlier.
Analysts on average had expected a profit of $8.84 per share, according to LSEG data.
Shares of the firm fell 0.4% Friday, while the broad S&P 500 rose approximately 0.3%.
(Reuters - Reporting by David Randall in New York, Tommy Reggiori Wilkes in London and Jaiveer Singh Shekhawat in Bengaluru; Editing by Krishna Chandra Eluri, Mark Potter, Emelia Sithole-Matarise and Louise Heavens)