BlackRock Inc., the world’s largest asset manager, said Friday it has struck a deal to buy Global Infrastructure Partners (GIP), where the Nigerian lawyer and investment banker, Adebayo Ogunlesi, is the chairman and CEO.
The deal is said to be worth $12.5 billion.
The transaction will involve a combination of cash and equity, with BlackRock paying $3 billion in cash and roughly 12 million shares, valued at $9.5 billion at the close of trade on Thursday.
Among the terms of the deal, which is expected to reach closure in the third quarter, is that GIP’s management will lead a joint infrastructure private markets investment platform at BlackRock.
Mr Ogunlesi is joining the board of BlackRock and the global executive committee.
“The unprecedented need for new infrastructure – for digital infrastructure, for upgraded logistics hubs, and for decarbonization and energy security – coupled with record high government deficits means that private capital will be needed like never before,” said BlackRock’s president, Bob Kapito.
He added, “This will be one of the fastest-growing areas of our industry over the next 10 years.”
The deal is the biggest since BlackRock bought Barclays Global Investors in 2009, brightening its chance of becoming the foremost provider of exchange-traded funds.
GIP manages $100 billion in assets, meaning the acquisition of the firm could help BlackRock play big in the private and alternative assets market.
BlackRock’s earnings for the last quarter of last year showed total client assets climbed past $10 trillion for the first time in two years.
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BlackRock is positioning itself as a one-stop shop for a complete suite of investing options, comprising alternative assets that are in great demand from institutional investors like sovereign wealth funds, pensions as well as endowments.
At the moment, alternative assets contribute about 3 per cent of BlackRock assets under management, accounting for 10 per cent of fees.
BlackRock held $50 billion worth of infrastructure assets as of September which, if combined with GIP, will create an entity to rival some of the biggest players in the industry including Brookfield Asset Management and Macquarie Asset Management.
GIP boasts a significant stake in London City Airport, which it acquired in 2006, and in London Gatwick Airport, in which it purchased a majority holding in 2009 for around £1.5 billion.
Mr Ogunlesi set up GIP in May 2006, with support from Credit Suisse and General Electric, both contributing roughly 9% of the US$5.64 billion of GIP’s first fund.
He is currently the lead independent director at Goldman Sachs Group Inc., making him the second most powerful member of the board after Chairman and CEO David Solomon. But Mr Ogunlesi will give up that role to take a new position on the board of BlackRock.
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