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Dealwatch: Global 100 advisers take centre stage on BlackRock-GIP $12.5bn mega deal

Skadden, Fried Frank, Kirkland and Debevoise have all taken lead advisory roles as BlackRock announced on Friday (12 January) that it will buy Global Infrastructure Partners (GIP) for an eye-watering $12.5bn. The transaction will give BlackRock a total of $150bn in infrastructure assets, rocketing it to the top tier of infra funds.

The transaction sees BlackRock acquire 100% of GIP’s business and assets, which include Gatwick, London City, and Edinburgh airports as well as the Port of Melbourne and a raft of LNG assets around the world. The total deal value includes $3bn in cash and 12 million in BlackRock shares, with around 30% of the total consideration deferred, expected to be issued in approximately five years ‘subject to the satisfaction of certain post-closing events’.

Skadden has lined up for BlackRock, with a team including financial institutions group co-head and asset management transactions practice lead David Hepp and M&A partners Matthew Collin and Patrick Lewis. Also on the deal are tax partner Victor Hollender, capital markets partner Laura Kaufmann Belkhayat; banking partner M. Janine Jjingo; antitrust partner Kenneth Schwartz; IP and technology partner and web3 and digital assets group co-head Stuart Levi; global employment group head David Schwartz; executive compensation and benefits partner Shalom Huber; SEC reporting and compliance practice co-head Brian Breheny; investment management group head Michael Hoffman; and New York office head and investment management partner Heather Cruz. All partners are based in New York, except Breheny in Washington DC.

BlackRock is also being advised by a Fried Frank team led by asset management partner Jonathan S. Adler in New York and Kate Downey in London.

On the other side of the table Kirkland is advising GIP, with a team led by New York investment funds group partners Daniel Lavon-Krein and Christopher Gandia. The team also includes corporate partners Melissa Kalka and Rami Totari in Dallas; Stephen Noh in Houston; Andrew Calder in Houston and Austin; and Douglas Bacon in Houston and New York. Houston and Austin-based Julian Seiguer advised on capital markets, while tax advice was provided by Stephen Butler in Austin and Houston and Joseph Tootle in New York.

A New York-based team from Debevoise also advised GIP, with investment management partner Alisa Waxman and tax partner Peter Schuur leading, with support from investment management partner and private equity group co-chair Jonathan Adler and tax partners Stephen Jordan and Daniel Priest.

BlackRock also announced its Q4 and year-end 2023 results, which saw its total assets under management increase 16% year-on-year to just over $10trn, as well as changes to its management structure. GIP chairman and chief executive Adebayo Ogunlesi and four more of GIP’s six founding partners will lead the joint infrastructure platform at BlackRock, with Ogunlesi also due to take a seat on BlackRock’s board at the first scheduled board meeting after closing, subject to onboarding procedures.

The deal reportedly came about as a result of bilateral talks between Ogunlesi and BlackRock chair and CEO Laurence Fink, who co-founded the asset management giant in 1988. Both Ogunlesi and Fink were enthusiastic about the infrastructure market in the statement announcing the transaction. ‘Infrastructure is one of the most exciting long-term investment opportunities’, said Fink. ‘We believe the expansion of both physical and digital infrastructure will continue to accelerate.’ He went on: ‘Policymakers are only just beginning to implement once-in-a-generation financial incentives for new infrastructure technologies and projects’.

Ogunlesi, who founded GIP in 2006, added: ‘Investors have adopted private infrastructure investing for its ability to provide stable cashflows, less correlated returns, and a hedge against inflation.’

The increasing importance of private capital in the infrastructure sector, and, conversely, the increasing attractiveness of infrastructure assets in tougher economic times, have been major topics on the minds of infrastructure and corporate lawyers throughout 2023 and into 2024. This game-changing deal stands as a prime example of the sort of consolidation partners have been predicting, and will vindicate law firms’ investments in the sector: In the last year alone, firms from Kirkland to Paul Hastings have built up dedicated London offerings, while firms ranging from magic circle and US giants to sector specialists like Ashurst have continued to hire apace.

BlackRock has now bought its way to a strong position in a market that the statement announcing the deal cites as ‘a $1 trillion market today’ and ‘forecast to be one of the fastest-growing segments of private markets in the years ahead’. Some warn of potential culture clashes and issues with conflict of interest. But initial market reaction to the deal seems to have been at least steady, as BlackRock’s shares climbed 1.3% from $790 on Friday morning to $800.26 at 4pm EST.

The deal is expected to close in Q3 2024, subject to customary regulatory approvals and other closing conditions.