Harry Cummins
Updated on: October 12, 2024 1:45 am GMT
The U.S. Federal Energy Regulatory Commission (FERC) has officially approved BlackRock’s acquisition of Global Infrastructure Partners (GIP) for $12.5 billion. This landmark deal marks a significant expansion for BlackRock in the infrastructure investment sector.
Details of the Acquisition
Announced earlier this year, the acquisition involves a combination of $3 billion in cash and approximately 12 million shares of BlackRock’s common stock. The approval under section 203 of the Federal Power Act allows BlackRock to strengthen its position in the energy sector through GIP, which is recognized for its extensive portfolio in energy, transport, digital infrastructure, and water and waste management.
- Transaction Breakdown:
– Cash Payment: $3 billion
– Stock Payment: Approximately 12 million shares of BlackRock common stock
The anticipated closing date for this acquisition is set for October 1, 2024, pending regulatory approvals and customary closing conditions.
Structure of the Transaction
The merger will occur under Delaware law, involving BlackRock Funding, Inc., a wholly-owned subsidiary of BlackRock. The process will see a merger that makes BlackRock a wholly-owned subsidiary of a new entity called “New BlackRock.” Key aspects of this structure include:
- Automatic Conversion: Existing BlackRock shares will be converted on a one-for-one basis into shares of New BlackRock.
- Public Listing Continuation: New BlackRock will retain the ticker symbol “BLK,” ensuring uninterrupted trading on the New York Stock Exchange (NYSE).
- Current Leadership: The Board and executive officers of BlackRock will continue in their respective roles following the merger.
In addition, BlackRock intends to voluntarily delist from the NYSE its Euro-denominated 1.250% Notes due 2025, with the delisting effective approximately ten days after filing a Notification of Removal from Listing with the Securities and Exchange Commission (SEC).
Regulatory Background
The approval from FERC was not without scrutiny. Last year, Commissioner Mark Christie raised concerns regarding the ownership of power utilities by major asset managers like BlackRock. The discussions highlighted the potential conflicts of interest when companies like BlackRock operate on both sides of the competitive fence. Christie emphasized the need for closer examination of large asset managers involved in significant acquisitions in the utility space.
- Key Concerns Raised:
– Potential conflicts due to dual roles in competition
– The necessity for strict oversight on acquisitions by large asset managers
Despite these concerns, FERC granted the necessary approvals, citing BlackRock’s existing blanket authorization to hold interests in various load-serving entities and independent power producers.
Impact on the Infrastructure Sector
This acquisition is poised to create a multi-asset class infrastructure investing platform with over $150 billion in combined client assets under management across equity, debt, and other financial solutions. By integrating GIP’s proprietary origination and business improvement capabilities with BlackRock’s global relationships, the merger aims to enhance deal flow and offer diversified co-investment opportunities for clients.
Global Infrastructure Partners, established in 2006, currently manages more than $100 billion in assets. Its expertise spans across key sectors that are critical to global infrastructure, including:
- Energy
- Transport
- Digital Infrastructure
- Water and Waste Management
Through this strategic acquisition, BlackRock aims to leverage GIP’s established capabilities to strengthen its position in infrastructure and broaden its investment offerings.
Conclusion
BlackRock’s acquisition of Global Infrastructure Partners not only underscores the growing trend of consolidation in the asset management industry but also reflects the increasing importance of infrastructure investments in addressing global challenges. With the anticipated closing date approaching, industry stakeholders will be keenly observing how this merger will reshape the landscape of infrastructure investment in the United States and beyond.
Getting the green light from FERC is a big step for BlackRock. This approval will help them grow and offer better investment options and services in an important industry.
