Nick Evans writes that BlackRock is establishing a perpetual infrastructure investing strategy that will seek to partner with leading infrastructure businesses over the long term to help drive the global energy transition.
Building on the broad capabilities of the firm’s longstanding infrastructure platform, it will seek to make lasting investments in core assets and aim to create resilient, inflation-linked returns for investors, while creating growth in the real economy. Over half of the strategy will be allocated to Europe initially, with the aim of becoming increasingly global over time.
BlackRock intends to launch underlying open-ended investment vehicles for the new strategy and will be seeking founding partners for these funds later this year. The firm says the open-ended structures will provide the ability to continuously raise and invest capital over the life of the strategy.
The firm believes that the shift toward a green economy is creating a step change across all infrastructure sectors today, opening attractive investment opportunities in several areas. The new strategy will pursue investments in the mega-trends of energy transition and energy security, as well as digital and community infrastructure, sustainable mobility, and the circular economy.
It will seek to deploy capital into fully integrated businesses such as utilities and end-to-end renewable energy infrastructure players, as well as assets such as data centres, grid digitisation technologies, battery storage systems, and natural gas storage and transport facilities that are adaptable to incorporate hydrogen. Through its investments in these businesses, BlackRock will take an active approach in helping companies transition to lower-carbon business models over time.
“We believe the intersection of infrastructure and sustainability will be one of the biggest opportunities in alternative investments in the coming years. At the same time, recent events have sharpened the focus on energy security and further compounded the need for infrastructure investment,” said Edwin Conway, global head of BlackRock Alternative Investors.
“Private markets will continue to play a pivotal role in the energy transition, and we are pleased to offer our clients another way to go beyond simply navigating the transition to driving it forward.”
According to BlackRock, an estimated USD125 trillion of investment is needed globally by 2050 to reach net zero, including more than USD4 trillion per year compared to USD1 trillion per year currently. In addition to financing the transition over the long term, a new driving force has become the near-term issue of energy security, particularly in Europe, a result of the energy shocks caused by the war in Ukraine.
According to the BlackRock Investment Institute, the switch away from Russian energy will accelerate the net-zero transition in Europe over the long term but make it more divergent globally.
“BlackRock is a leader in the energy transition, having mobilised over $55 billion of investments across our infrastructure strategies since their inception,” said Anne Valentine Andrews, global head of BlackRock Real Assets.
“Our ability to convene companies, governments and institutional clients means we are uniquely placed to deploy capital from investors globally into real assets that drive the energy transition and have a positive impact on local communities and economies.”
BlackRock Alternative Investors – which has USD330 billion of assets under management across real estate, infrastructure, private equity, credit, hedge funds and alternative solutions – has a broad range of private market capabilities designed to help drive the energy transition.
As an early mover in the energy transition, its first investment in renewable power on behalf of its clients was a wind project in Europe in 2012. Since then, the firm’s USD75 billion Real Assets business has continued to evolve its strategies with the broadening market opportunity through its diversified infrastructure and climate infrastructure businesses.
BlackRock today manages one of the largest climate infrastructure franchises globally, investing in renewables across developed markets. The firm recently partnered with the governments of France, Germany, and Japan, together with a number of institutional investors and leading foundations, to raise the Climate Finance Partnership, a flagship blended finance vehicle focused on investing in climate infrastructure across emerging markets.
Most recently, the group established Decarbonization Partners, a partnership with Singapore’s Temasek focused on late-stage venture capital and early growth private equity investing in decarbonisation solutions.
