BlackRock to Buy First Reserve’s Energy Infrastructure Funds

  • Asset manager gains $3.7 billion in two First Reserve funds
  • Florian’s global team to join BlackRock when deal is completed

BlackRock Inc., the world’s biggest asset manager, agreed to buy two First Reserve Corp. energy-infrastructure funds that oversee $3.7 billion in capital.

The 37 people who work on the funds, led by Mark Florian, will join BlackRock when the deal is completed, the New York-based buyer said Wednesday in a statement that didn’t disclose terms. The transaction will boost to $14 billion the amount of BlackRock client assets in its infrastructure platform. The company said the deal is expected to be completed by the middle of the year.

“Governments and businesses around the world have become increasingly aware of the need to invest in infrastructure and the role that sophisticated investors can play in the development process,” BlackRock said in the statement.

President Donald Trump and Democratic lawmakers have proposed spending as much as $1 trillion on infrastructure, sparking renewed interest in the business from investment funds. BlackRock Chief Executive Officer Laurence Fink is a member of Trump’s Strategic and Policy Forum, a panel of business leaders that will advise the administration on the economy. The president also asked real-estate developers Richard LeFrak and Steven Roth to lead a new council to advise him on infrastructure investments, LeFrak said last month.

The prospect of massive new spending on roads, bridges, ports and other infrastructure has mobilized government officials and finance executives around the nation. About 40 U.S. states have already generated a list of projects that could be started quickly.

Blackstone Group LP is considering a target of as much as $40 billion for infrastructure deals, the firm’s head of private equity, Joe Baratta, said Tuesday. Blackstone CEO Steve Schwarzman is chairman of the president’s economic-policy forum.

For more: Watch Joe Baratta’s interview on Bloomberg Television

Global Infrastructure Partners, an owner of London’s Gatwick Airport, raised a record $15.8 billion for the largest fund of its kind, company officials said last week.

Brookfield Asset Management Inc. finished raising $14 billion for its third infrastructure fund last year, exceeding a $10 billion target, and Carlyle Group LP is gathering money for a new global infrastructure fund, its executives have said.

While Trump has proposed spending between $550 billion and $1 trillion on the initiative, Republican House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell have said they don’t support new spending without offsetting cuts, perhaps as part of a budget or tax-reform measure.

— With assistance by Melissa Mittelman, Jason Kelly, Katherine Burton, Mark Niquette, and Devin Banerjee

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