What Larry Fink Says
5 years, 5 months, 5 days, 22 hours
16 February 2024
A conversation last week with an infrastructure investor suddenly brought home to me the significance of the announcement on 12 January of the acquisition of Global Infrastructure Partners (GIP) by BlackRock.
The scale and >25x multiple of the transaction, and what it means for the GIP founders, has dominated much of the media coverage. But it is far more important than that. What the deal signals, I believe, is the infrastructure finance market maturing from adolescence to adulthood, and that should matter to all of us, because private financial investment is currently the weakest link in our path to net zero and infrastructure asset resilience.
Announcing the deal Blackrock Chair and CEO Larry Fink said ‘Infrastructure is one of the most exciting long-term investment opportunities, as a number of structural shifts re-shape the global economy…Policymakers are only just beginning to implement once-in-a-generation financial incentives for new infrastructure, technologies and projects’.
Note that the deal is not a one-off. Only four days later General Atlantic announced the acquisition of Actis, an investor in sustainable infrastructure. And on 7 February infrastructure manager Ancala sold a minority stake to global investment firm Vontobel. Everything points to the world’s biggest private equity businesses realising that infrastructure is the world’s biggest investment opportunity. Finally.
GIP was founded only in 2006. It was a late entrant in a wave of infrastructure investor start-ups that began around 2002. Literally hundreds were formed and most of them quietly evaporated, but some like GIP have grown into hugely successful businesses. But even managing $100bn in infrastructure assets meant GIP was just a big fish in an infrastructure village pond.
I hope non-infrastructure readers will appreciate this piece isn’t me just indulging my infrastructure obsession. Estimates vary but we need perhaps $100 trillion invested in the transformation of the world’s economy to one that is fully decarbonised and protected against the inevitable worsening of climatic impacts. And we need that money now. The GIP deal should give us all hope that the financial sluice gates are now being opened.