After the failed acquisition of Huaping, we successfully secured the second largest global infrastructure private equity fund with a value of 12.5 billion US dollars. This marks the most significant transformation in the past 15 years for the world's largest asset management company.

BlackRock has taken a crucial step in the alternative investment field.

On January 12th, local time, the world's largest asset management company, BlackRock, agreed to acquire Global Infrastructure Partners (GIP), an infrastructure investment fund company, for approximately $12.5 billion. This will be BlackRock's largest acquisition since its acquisition of Barclays Asset Management in 2009.

In recent years, BlackRock has been looking to enter the alternative investment field to further enhance its position in private equity. As mentioned in a previous article by Wall Street News, BlackRock had attempted to acquire alternative asset management giant AlpInvest, but was rejected.

The birth of the world's second-largest private infrastructure management company

According to the transaction announcement, BlackRock will provide $3 billion in cash and 12 million shares of its own stock, with a stock value of approximately $9.5 billion. According to informed sources cited by the media, the majority of GIP's equity is held by six founding partners, who will become BlackRock's largest shareholders by acquiring approximately 8% of BlackRock's outstanding shares.

Five of the six founding partners of GIP will join BlackRock, with GIP's CEO, Bayo Ogunlesi, becoming a member of BlackRock's board of directors and leading BlackRock's newly established infrastructure division.

BlackRock expects the transaction to be completed in the second or third quarter, after which BlackRock will integrate GIP with its existing infrastructure team. BlackRock stated that the new company will become the world's second-largest private infrastructure management company, with assets under management exceeding $150 billion, second only to Brookfield Asset Management.

BlackRock has been working to expand its private equity market business, which grows faster than its core business of selling low-cost passive investment products such as ETFs and offers greater potential profits. The acquisition of GIP will increase BlackRock's private equity assets by approximately 30% and double its private equity market base management fees.

"The most significant transformation in fifteen years"

Citing BlackRock's CFO, Martin Small, the media reported that the growing government deficit has increased the demand for private financing of large infrastructure projects, while government subsidies have made private investment more attractive.

Small said that BlackRock prefers to acquire GIP rather than more traditional private equity firms, in part because the best returns obtained by traditional private equity firms in the era of zero interest rates are a thing of the past.

In a memo to employees, BlackRock also announced a restructuring, calling it "the most significant transformation in fifteen years." BlackRock will establish a new global product services department responsible for all of the company's investment strategies and fund structures, including its massive iShares ETF business. The memo states that the goal of the department is to connect customers with all of BlackRock's products and help "drive the next phase of growth for iShares."

According to the latest earnings report released by BlackRock on Friday, the company's assets under management (AUM) reached the milestone of $10 trillion at the end of the fourth quarter, marking the second time in BlackRock's history to achieve the "10 trillion achievement" since the fourth quarter of 2021.