BlackRock Inc. has announced that it is entering into an agreement to acquire Global Infrastructure Partners (GIP), an independent infrastructure fund manager, for $3 billion in cash and approximately 12 million shares. This acquisition comes as the infrastructure market continues to grow rapidly, with a current valuation of $1 trillion.
Strong Growth Potential in the Infrastructure Market
According to BlackRock, several long-term trends contribute to the acceleration in infrastructure investment. The increasing global demand for upgraded digital infrastructure, such as fiber broadband, cell towers, and data centers, is a significant driver. Additionally, there is renewed investment in logistical hubs like airports, railroads, and shipping ports as supply chains are being rewired. There is also a movement towards decarbonization and energy security in many parts of the world.
Global Infrastructure Partners: A Proven Leader in the Field
Established in 2006, GIP is known for its expertise in managing over $100 billion in assets. The company has built a strong reputation for driving improvements in its portfolio companies. With more than 40 portfolio companies generating over $75 billion in annual revenue, GIP plays a vital role in the infrastructure sector. Furthermore, it employs about 115,000 people worldwide.
Debt Financing and Expected Benefits
To finance the cash portion of the acquisition, BlackRock plans to raise approximately $3 billion of additional debt. The deal is expected to have a modest positive impact on adjusted earnings per share (EPS) and operating margin in its first full year after completion. The closing of the transaction is anticipated in the third quarter.
BlackRock's stock has shown a 5% increase over the past 12 months, while the S&P 500 has gained 20%. This acquisition positions BlackRock to capitalize on the growth opportunities within the thriving infrastructure market.
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