In a union of investment giants, BlackRock Inc. — the sometimes controversial investment behemoth — is acquiring Global Infrastructure Partners for $3 billion in cash and approximately 12 million shares of BlackRock.
The result will be a stand-alone infrastructure business valued at $150 billion led by GIP’s Bayo Ogunlesi and the current GIP management team. It would also become, by some estimates, the largest infrastructure investor in the world.
In their announcement, BlackRock said they are forecasting infrastructure — from airports, bridges and railroads to data centers, fiber broadband and decarbonization projects — as “one of the fastest growing segments of private markets in the years ahead.”
The deal, which is expected to close by the third quarter of 2024, was advised on the financial side by Perella Weinberg Partners as lead financial advisor to BlackRock, with Evercore advising GIP.
Outside legal counsel included Skadden, Arps, Slate, Meagher & Flom and Fried, Frank, Harris, Shriver & Jacobson for BlackRock. Kirkland & Ellis and Debevoise & Plimpton acted as legal counsel to GIP.
For Kirkland, funding advice was led by investment partners Daniel Lavon-Krein and Christopher Gandia from New York. M&A was led from Dallas and Houston by corporate partners Melissa Kalka, Andy Calder, Doug Bacon, Stephen Noh, Kate Willson and Rami Totari; capital markets partner Julian Seiguer; and tax partners Stephen Butler and Joseph Tootle (in New York).
The Skadden team included no lawyers from Texas. Led from New York with support from its Washington, D.C. offices were M&A partners David Hepp, Matthew Collin and Patrick Lewis; tax partner Victor Hollender and counsel Michael Cardella; antitrust/competition partner Kenneth Schwartz; intellectual property and technology partner Stuart Levi; labor and employment law partner David Schwartz; executive compensation and benefits partner Shalom Huber; SEC reporting and compliance partner Brian Breheny; investment management partner Heather Cruz; capital markets partner Laura Kaufmann Belkhayat; and banking partner M. Janine Jjingo.
“Infrastructure is one of the most exciting long-term investment opportunities, as a number of structural shifts re-shape the global economy. We believe the expansion of both physical and digital infrastructure will continue to accelerate, as governments prioritize self-sufficiency and security through increased domestic industrial capacity, energy independence, and onshoring or near-shoring of critical sectors. Policymakers are only just beginning to implement once-in-a-generation financial incentives for new infrastructure technologies and projects,” said Laurence D. Fink, BlackRock chairman and CEO.
Founded in 2006 as a joint venture with American International Group to acquire London City Airport, GIP now manages about $100 billion in infrastructure assets, including midstream operations in Texas like Access Midstream (Barnett, Eagle Ford, etc.), Enlink Midstream (Texas, Oklahoma, Louisiana), Houston-based Hess Midstream and Medallion Gathering & Processing (Midland).
GIP is also heavily involved in LNG facilities along the Texas Gulf Coast. In 2021, GIP sold a 25.7 percent interest in the Freeport LNG facility. GIP had acquired the interest in 2015. In July, GIP shared in a $5.9 billion commitment (along with Mubadala Investment and TotalEnergies) as part of NextDecade’s Final Investment Decision to proceed with the first three LNG liquefaction trains at the Rio Grande LNG terminal in Brownsville.
BlackRock, one of the world’s largest investors with $9.4 trillion in assets under management, is well-known for its investment in alternative energy and energy transition projects. As such, it has been the target of political consternation in several energy-rich states, including Texas.
The State of Texas currently bars its state-regulated pension funds from investing in 350 funds run by BlackRock and others because of their perceived animus toward fossil fuels. BlackRock, however, invests heavily in Texas energy companies. An analysis just this week by Bloomberg News found that 72 of BlackRock funds have invested at least $2 billion into various Texas energy companies.
In September 2022, FTC chairman Lina Khan was quizzed by a Senate committee regarding charges that BlackRock was violating federal antitrust laws by insisting that its investment projects adhere to energy transition and other ESG initiatives.