BlackRock raises US$4.5b for infrastructure investments

BLACKROCK, the world’s largest money manager, has raised US$4.5 billion to invest in infrastructure assets it believes will benefit from a global shift to low-carbon energy.

The firm is targeting as much as US$7.5 billion for its new infrastructure fund overall, BlackRock’s head of diversified infrastructure Mark Florian said in an interview. Having reached a first close of US$4.5 billion, the fund will begin investing.

Public and private pension funds, sovereign wealth funds, ultra-high net worth individuals and insurance companies have put money into the fund, the firm said in a statement.

Investors like the regular cash flows and relatively robust performance of utilities and other infrastructure assets in recessions. They have remained keen even as the outlook for alternative assets like private equity darkens amid rising interest rates and the threat of a recession, Florian said. BlackRock’s third and most recent infrastructure fund raised US$5.1 billion in 2020.

The amount of investor cash targeting the sector is forecast to grow to US$1.87 trillion by 2026, from US$864 billion at the end of 2021, according to data provider Preqin.

“People haven’t worried about inflation for a long, long time – now they are,” Florian said. BlackRock mitigates against the impact of inflation and uses long-term fixed-rate debt to protect against interest rate rises, he added. The fund and the assets it will invest in are “set up to survive well in an inflationary time”.

Energy exposure

BlackRock is among the world’s largest investors in the energy industry, with stakes in publicly traded companies like Exxon Mobil and ConocoPhillips. Its exposure to the sector through private markets has grown and its infrastructure platform now manages more than US$50 billion in client assets across a range of funds.

BlackRock began investing in renewable power in 2012, since when it has scaled up its presence. Among its investments are stakes in UK smart metre installer Calisen and US-based natural gas producer Vanguard Renewables.

BlackRock has faced criticism from some groups for prioritising ESG concerns, like investing in sustainable energy sources, over shareholder profits.

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Earlier this month, Missouri withdrew US$500 million of pension assets from BlackRock, criticising the firm for “advancing a woke political agenda above the financial interest of their customers”.

Louisiana’s treasurer also said in October that his state would pull US$794 million from BlackRock funds on the grounds that the firm’s alleged anti-fossil fuel policies were damaging to the state’s energy industry. BLOOMBERG