More infra, credit M&As in store after BlackRock-GIP deal

This year is poised to be a busy year for mergers and acquisitions as investment managers strengthen teams that are expected to develop over the next decade.
More infra, credit M&As in store after BlackRock-GIP deal

BlackRock's infrastructure-focused acquisition is testament to rapidly rising demand for infrastructure solutions among institutional investors, according to industry experts.

More mergers and acquisitions are likely to follow as investment managers rush to build out capabilities.

"While it won’t be a blowout year [for M&As], it will be “considerably busier than 2023,” said Tim Clark, partner at legal firm Mayer Brown’s New York office and co-leader of the firm’s global private funds and investment management practice.

“There is a huge amount of demand for infrastructure deals [and it’s why BlackRock wanted to do this],” he told AsianInvestor.

The world's largest investment manager announced on January 12 that it will buy infrastructure-focused investment manager Global Investment Partners (GIP) for about $12.5 billion. GIP has a portfolio that includes Britain’s Gatwick airport, Melbourne port and large offshore wind projects.

Tim Clark
Mayer Brown

The deal adds approximately $150 billion in infrastructure assets to BlackRock’s portfolio.


Other experts agreed about the high demand for infrastruture opportunities among institutional clients.

"Currently, we are seeing the largest institutional investor allocations in the areas of infrastructure, commercial real estate and credit (both in terms of direct lending and also distressed credit opportunities)," Effie Vasilopoulos, partner and leader of the APAC investment funds group at legal firm Sidley Austin, told AsianInvestor.

Several asset owners have also told AsianInvestor that they are interested in infrastructure investments.

Pentagreen Capital, backed by Singapore's Temasek and HSBC, is scouting for low-carbon infrastructure projects in Southeast Asia.

British International Investment has also expressed interest in infrastructure and renewables projects in the region.

Aware Super, Australia's third-largest superannuation fund, meanwhile, is eyeing infra investments in Europe as it looks at overseas investment opportunities.


Growth prospects for infrastructure companies are expected to be strong in 2024, according to a ClearBridge Investments 2024 outlook for infrastructure.

“Much of this growth will be driven by the energy transition as the world addresses its need to build out the networks of poles and wires to connect all the renewable facilities generators,” the December 2023 report noted.

Effie Vasilopoulos
Sidley Austin

“A public policy tailwind is particularly prevalent in the US (following the Inflation Reduction Act or IRA) and Europe (following REPowerEU and the Green Deal Industrial Plan). We expect this to strengthen in 2024, given it will be an election year in many jurisdictions.”

About $3.9 trillion will be required annually for infrastructure investment, with the greatest demand coming from emerging markets, according to a PwC report.

Infrastructure as an asset class attracts the largest allocations from long-term investors, noted  Vasilopoulos.

"This is tremendously stable capital that is highly prized by most fund managers," she said, adding that there will be continued focus on airports, clean energy and energy transition projects (including solar, hydro and wind farms) as well as transportation and natural gas pipelines.


Investment managers that emerged from the COVID-19 pandemic with significant cash reserves are well placed to capitalise by consolidating weaker competitors – a trend that could be mirrored in Asia, according to industry experts.

Well-established top-tier fund houses will be looking for opportunities to strengthen existing teams that are expected to develop over the next decade.

“This dynamic has favoured the infrastructure, credit and real estate segments of the market where well branded managers see growth opportunities and are looking to expand market share by acquiring further capability at favourable valuations,” Vasilopoulos said.

Along with infrastructure, private credit expertise is in hot demand for potential acquirers -- in line with continuing high demand for private market assets among institutional investors such as pension funds and sovereign wealth funds.

Mayer Brown’s Clark noted that these kinds of M&As are mainly about acquiring scale. “The managers have been trying to diversify into debt and some managers are much further along than others,” he said, adding that the legal firm is working on a couple of deals right now.

“There are a few different managers that are looking for acquisitions to bolt on private credit to their existing businesses,” Clark added.

Still, don’t expect mega deals like BlackRock’s, which was a 'special kind of transaction,' one expert noted.

Miranda Zhao
Natixis CIB

“The current market environment is not in favour of mega transactions given market uncertainties and financing costs,” Miranda Zhao, head of M&A, Asia Pacific at Natixis CIB.

“That being said, this area [infrastructure] could be a relatively resilient area compared to the average market for mega transactions,” Zhao told AsianInvestor.

Zhao expects to see more efforts among investment firms to find synergies either through sector expertise, regional coverage or different deal structures and financing elements.

The need to possess a multi-strategy investment strategy is also emerging as a key theme for managers -- another driver for developing resources.

“Many asset managers and private equity firms are expanding into relevant new verticals to be more resilient and competitive, also allowing these key market players to penetrate further and gain deeper exposure to the full circle of the corporate and overall economy growth cycle,” Zhao said.


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