Saturday, June 15, 2024

Why BlackRock is betting billions on infrastructure

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The global economy is on the cusp of an “infrastructure revolution”, if Larry Fink is to be believed. The boss of BlackRock, the world’s largest asset manager, made the modest prediction shortly after announcing on January 12th that his firm would acquire Global Infrastructure Partners (GIP) for $12.5bn. That company, led by Adebayo Ogunlesi, an old pal of Mr Fink’s from their banking days, is the world’s third-largest infrastructure investor, behind Australia’s Macquarie and Canada’s Brookfield. Its assets range from Gatwick Airport in London to the Port of Melbourne. Mr Ogunlesi and his fellow partners will collectively become BlackRock’s second-largest shareholder.

Mr Fink is not the only one excited about the industry. On January 16th General Atlantic, a private-equity (PE) firm, confirmed reports that it would buy Actis, an infrastructure investor focused on emerging markets. In September CVC, another PE firm, announced it was buying DIF, a Dutch infrastructure investor. Over the past decade assets under management in infrastructure funds have increased almost five-fold, to $1.3trn, according to Preqin, a data provider. Pension funds and sovereign-wealth managers have been lured in by the industry’s returns, which are both handsome and relatively stable. More than half of such backers surveyed by Preqin intend to increase the share of their portfolios allocated to infrastructure. Some of the larger among them now invest directly in these dull assets. Why, then, all the excitement?

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