Investing in infrastructure alongside governments, including those in Mexico and India, is one of BlackRock Inc.’s biggest priorities, said Laurence D. Fink, chief executive officer of the world’s largest money manager.
“We don’t expect to see real huge revenues in infrastructure spending for another five years,” Fink said in a telephone interview. “You’ve got to build it. That’s one of our longest tail investments we could ever make, and yet we believe it’s so important for BlackRock to be identified as we expand our business worldwide,” he said.
Fink is adding infrastructure offerings as he seeks to attract clients with alternatives to traditional bond investments, whose returns have been eroded by years of near-zero interest rates. BlackRock, which is seeking to run as much as $30 billion in infrastructure, joins DoubleLine Capital, Oaktree Capital Group LLC, and Canadian pension Caisse de Depot et Placement du Quebec in expanding such products.
BlackRock, which reported a 1.4 percent increase in second-quarter profit on Wednesday, this year acquired Infraestructura Institucional, a Mexican infrastructure investment firm, and bought a stake in two natural gas pipelines owned by state oil company Petroleos Mexicanos. The New York-based firm is also looking at opportunities in India, Asia’s third-biggest economy.
The U.S. spends too little on its infrastructure, Fink said, citing a statistic that the world’s biggest economy spends the least on the programs as a percentage of its gross domestic product among major countries.
“It’s imperative we spend more money,” he said. State and federal governments are strapped for cash, so “we need to create arrangements where the private sector can partner” with the public sector.
“I hope one day that this country can start finding solutions toward infrastructure, because we’re continuing to underspend,” Fink said. “Now that’s the sad part: we have very few people in infrastructure in the U.S.”