06.16.2022

BlackRock to Launch Perpetual Infrastructure Strategy

06.16.2022
CME Boosts European Energy Business

Long-term capital structures provide the flexibility to invest across the major themes of energy transition and energy security

More than half of the strategy will be allocated to Europe initially, becoming globally diversified in the coming decades

BlackRock announced it will establish a perpetual infrastructure 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 BlackRock’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, becoming increasingly global over the decades to come.

The shift toward a green economy is creating a step change across all infrastructure sectors today, opening attractive investment opportunities in several areas. This strategy will pursue investments in the megatrends 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 centers, grid digitization technologies, battery storage systems, and natural gas storage and transport facilities, where 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.”

An estimated $125 trillion of investment is needed globally by 2050 to reach net zero1, including over $4 trillion per year compared to $1 trillion per year currently. 2 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.3

“BlackRock is a leader in the energy transition, having mobilized 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 has a broad range of private market capabilities designed to help drive the energy transition. As an early mover in the energy transition, BlackRock’s first investment in renewable power on behalf of its clients was a wind project in Europe in 2012. Since then, BlackRock’s $75 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. BlackRock 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, BlackRock established Decarbonization Partners, a partnership with Temasek focused on late-stage venture capital and early growth private equity investing in decarbonization solutions.

Additionally, BlackRock has recently partnered with companies and invested in projects that help to drive the energy transition. These include, among others: a joint venture with KX Power, the UK-based developer and operator of battery energy storage systems; an investment in Kellas Midstream, an energy infrastructure company that is developing a major blue hydrogen project in the UK; the signing of a memorandum of understanding with Aramco to explore joint opportunities in future energy transition projects related to low carbon energy infrastructure; an investment in Calisen, a leading owner and installer of smart meters in the UK; and an investment in IONITY, one of Europe’s leading high-power charging networks, which will enable the company to increase the number of high-power charging points by more than four times by 2025.

BlackRock intends to launch underlying open-ended investment vehicles and will be seeking founding partners in the second half of 2022. The open-ended structures will provide the ability to continuously raise and invest capital over the life of the strategy.

Source: BlackRock

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