By Charlie Conchie
Top investors on both sides of the Atlantic could be set to pump cash into the $1trn infrastructure market as governments ramp up pressure on the private sector for investment, experts have suggested.
BlackRock, the world’s biggest asset manager, announced on Friday it would snap up the world’s biggest infrastructure investor in a bumper $12bn deal that will triple its infrastructure assets under management.
In a statement on the tie-up, BlackRock chief Larry Fink said “structural trends” were accelerating a push into the $1trn sector as politicians incentivise investment from private investors.
“We believe the expansion of both physical and digital infrastructure will continue to accelerate, as governments prioritise self-sufficiency and security through increased domestic industrial capacity, energy independence, and onshoring or near-shoring of critical sectors,” Fink said.
Both the US Treasury department and national bodies in Britain have been pushing the private sector to inject cash into infrastructure projects in recent months.
In a paper in October, the US assistant secretary for economic policy Eric Van Nostrand said investing in infrastructure could “strengthen our long-term productive capacity” and create “opportunity for Americans in disadvantaged communities”.
The statements have been mirrored in the UK as ministers and government bodies look to unlock a wave of capital from top firms.
An injection of around £40bn to £50bn a year from the private sector would result in average household savings of some £1,000 a year, better economic productivity and quality of life in the future, the National Infrastructure Commission, set up by George Osborne in 2015, said in October.
Among the headline changes of the UK’s financial regulation overhaul are also tweaks to solvency regime governing the insurance industry, designed to boost investment in infrastructure. A new Solvency UK regime could enable £100bn to be invested in so-called productive assets over the next ten years, according to the Association of British Insurers.
Neil Edison, head of research at Edison, told City A.M. investors will be looking to infrastructure as an asset class increasingly over the next year as
Despite a downturn in infrastructure investment globally in 2023, analysts at Pitchbook said Blackrock’s deal signalled a trend of investors looking to take advantage of upward growth in valuations in the sector.
“[General partners] remain active and acquisitive in the infrastructure asset class as managers look to expand AUM, increase fee-earning segments, and scale overall growth,” they said.
Blackrock’s swoop on GIP follows a number of similar deals through 2023, led by Bridgepoint’s $1.1bn acquisition of Energy Capital and Blue Owl’s stake in Stonepeak.
