Alternative assets: BlackRock buys GIP for US$ 12.5 billion – 01/12/2024 – Market

BlackRock announced this Friday (12) the purchase of Global Infrastructure Partners (GIP) for US$ 12.5 billion (around R$ 60.59 billion), in a major bet on alternative assets, and announced a reformulation of the top level of administration.

The transaction includes US$3 billion (R$14.54 billion) in cash and US$12 million (R$58.16 million) in BlackRock shares and will see the asset management giant become one of the largest players in alternative assets —with a total of US$150 billion (R$727.03 billion)— and private markets.

BlackRock, which manages US$10 trillion (R$48.47 trillion) in assets across markets, has been seeking what it hopes will be a transformative deal, with Chief Executive Larry Fink telling analysts last year that the company was involved in more negotiations than it had in “many, many years.”

The company has a history of adding assets to bolster growth and diversify during periods of market weakness.

Founded in 2006, GIP manages more than US$100 billion (R$484.69 billion) in assets and has a portfolio that includes the British Gatwick airport, the Port of Melbourne (Australia) and large offshore wind projects.

“Infrastructure is one of the most exciting long-term investment opportunities as a series of structural changes reshape the global economy,” Fink said.

“The combination of these two companies will create the infrastructure platform to deliver best-in-class investment opportunities to clients around the world, and we couldn’t be more excited about the opportunities that lie ahead,” he said.

Change in command

BlackRock also revealed changes to its senior management structure, at a time when speculation is growing about who will succeed Fink, who founded BlackRock in 1988, as chief executive.

Stephen Cohen will become chief product officer and lead a new global product strategy group, while Salim Ramji, global head of iShares and index investing, 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 the Asia-Pacific region, the memo says.

Five of GIP’s founding partners will join BlackRock, including GIP Chairman Bayo Ogunlesi, who will also join BlackRock’s board of directors upon completion of the deal, he added.

Ogunlesi will leave the board of Goldman Sachs following his move to BlackRock, Goldman Chief Executive David Solomon said on Friday.

Infrastructure is one of the hottest investment classes, helped by rising demand for logistics and digital infrastructure, and the trillions of dollars needed for decarbonization.

“At first glance, we view the transaction as a long-term positive, as private equity and debt investing is one of the fastest growing categories within asset management,” said Kyle Sanders, analyst at Edward Jones.

8% increase in profit

BlackRock also reported an 8% rise in quarterly profit, helped by a recovery in markets that boosted its assets under management.

Hopes of a soft landing for the US economy — a scenario in which inflation declines without a sharp rise in unemployment — have buoyed markets in recent months.

A “dovish” tilt from the Federal Reserve, which has left interest rates unchanged since July, also boosted investor confidence, helping BlackRock end the fourth quarter with $10.01 trillion in earnings. assets under management (AUM), up from US$8.59 trillion the previous year.

On an adjusted basis, BlackRock earned $1.45 billion, or $9.66 per share, in the three months ended Dec. 31, compared with $1.36 billion, or $8. 93 per paper, a year earlier.

Analysts on average were expecting earnings of $8.84 per share, according to LSEG data.