BlackRock Alternatives (“BlackRock”), through its Infrastructure business, has raised US$4.5 billion in initial investor commitments for BlackRock Global Infrastructure Fund IV (“Infra IV” or the “Fund”), achieving over half of its targeted size at first closing. The Fund, which invests in essential infrastructure assets globally, secured initial commitments from a diverse group of institutional investors, including public and private pension funds, sovereign wealth funds, insurance companies and family offices. These clients are based around the world, including from the United States, Asia, Europe and the Middle East. Over 75 percent of the commitments in the Fund are from investors who have invested in prior vintages of the strategy.
The Fund is the fourth vintage of BlackRock’s flagship global diversified infrastructure equity fund series and builds on the strategy of the Global Energy & Power Infrastructure Funds. Infra IV seeks to deliver resilient cashflow and long-term capital appreciation to investors and is managed by the same global team of more than 60 infrastructure experts as its three predecessor funds. The group is led by Mark Florian and a senior team with 20 years of average industry experience,1 most of whom have been investing together for over a decade.
Demand for investment in infrastructure – essential for energy, industry, transport and other basic needs – is expected to significantly increase over the long term.2 Leveraging the team’s expertise, including unique sourcing, innovative deal construction, and active management, as well as BlackRock’s global platform, Infra IV seeks to build a diversified portfolio of essential, contracted infrastructure assets and businesses worldwide that are well-positioned to capitalize on three long-term, structural trends being accelerated by the global energy transition – Decarbonization, Decentralization and Digitalization (“3Ds”).3 Guided by the 3Ds, Infra IV will target investments across five sectors: Energy & Environmental, Low Carbon Power, Regulated Utilities, Transportation & Logistics, and Digital Infrastructure.
Over the coming decades, the energy transition will impact every part of the global economy, presenting significant investment opportunities for infrastructure investors.4 The Fund’s portfolio management team has deep experience investing in a range of infrastructure assets aligned with the transition, including carbon capture, renewable power, energy efficiency and renewable fuels. Infra IV will continue to target investments in climate solutions,5 while also supporting the infrastructure needed to ensure a stable, affordable energy supply during the transition.
“Since the inception of our funds 14 years ago, we have continually evolved our franchise alongside the growing market opportunity in infrastructure created by the changing ways we live, work, and connect,” said Mark Florian, Global Head of Diversified Infrastructure. “The positive initial response from our investors is a testament to BlackRock’s differentiated sourcing capabilities, disciplined investment approach and commitment to creating value for our clients.”
Infra IV, which is targeting $7.5 billion, succeeds Global Energy & Power Infrastructure Fund III (“GEPIF III”) and recognizes that the global energy transition is driving changes in many sectors beyond energy and power. GEPIF III held a final close of US$5.1 billion in 2020 and has since fully deployed its investors’ capital into companies and projects across the global power, midstream, utility, digital and transportation sectors. These investments include, among others: Vanguard+Renewables, a U.S.-based producer of renewable natural gas from agriculture and organic food waste; GasLog, a global provider of more efficient liquefied natural gas shipping services; Vopak, the operator of critical industrial storage facilities and shipping terminals; Calisen, a leading owner and installer of smart meters in the UK; Kellas+Midstream, the owner and operator of key midstream energy infrastructure; and Navigator+CO2, a developer of industrial-scale carbon capture pipeline system.
“Driven by long-term structural trends and macroeconomic conditions – as well as investors’ growing interest in strategies that allow them to help drive the global energy transition forward – infrastructure investing will continue to be an important component of many of our clients’ portfolios as well as a key growth driver for BlackRock,” said Anne Valentine Andrews, Global Head of BlackRock Infrastructure & Real Estate. “The success of Infra IV’s fundraise to date reflects this strong investor demand for an asset class that can provide income, inflation-mitigation and diversification against a challenging macro environment.”
BlackRock Alternatives’ infrastructure platform currently manages over US$50 billion in client assets across infrastructure equity, infrastructure debt, listed securities and solutions strategies.6 The team of over 230 infrastructure specialists offers investors proven global investment sourcing and sophisticated solutions to customize, manage and scale infrastructure exposure across sectors and asset classes. BlackRock is also an early mover in energy transition investing, having started investing in renewable power in 2012. The infrastructure platform has since built a leading suite of strategies designed to help clients invest in climate solutions and accelerate the transition to a low carbon economy.
About BlackRock Alternatives
BlackRock Alternatives serve investors seeking outperformance in real estate, infrastructure, private equity, credit, hedge funds and alternative solutions. We strive to bring our investors the highest quality investments by drawing upon our global footprint, superior execution capabilities and position as a preferred partner. BlackRock manages $313 billion in alternative investments and commitments on behalf of clients worldwide as of September 30, 2022.
RISK WARNINGS
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.
Infrastructure Funds. Infrastructure Funds invest exclusively or almost exclusively in equity or debt, or equity or debt related instruments, linked to infrastructure assets. Therefore, in addition to risks associated with investment in such equity or debt instrument, the performance of an Infrastructure Fund may be materially and adversely affected by risks associated with the related infrastructure assets including construction and operator risks, environmental risks, legal and regulatory risks; political or social instability; governmental and regional political risks; sector specific risks; interest rate changes; currency risks; and other risks and factors which may or will impact infrastructure and as a result may substantially affect a fund’s aggregate return. Investments in Infrastructure assets are typically illiquid and investors seeking to redeem their holdings in an Infrastructure Fund can experience significant delays and fluctuations in value.
Liquidity Risk. The Fund’s investments may have low liquidity which often causes the value of these investments to be less predictable. In extreme cases, the Fund may not be able to realise the investment at the latest market price or at a price considered fair.
Valuation risk. The Fund will be exposed to securities and other assets that will not have readily assessable market values. The valuation of such securities and other assets is inherently subjective and subject to increased risk that the information utilised to value such assets or to create the price models may be inaccurate or subject to other error. Due to a wide variety of market factors and the nature of the securities and assets to which the Fund will be exposed, there is no guarantee that any value determined will represent the value that will be realised on the eventual disposition of the Fund’s investments or that would, in fact, be realised upon an immediate disposition of such investment.
Lack of available investments. The Fund will be competing for exposure to investments in a highly competitive market, against other funds, as well as individuals, financial institutions, strategic players and other investors, some of which may have greater resources than the Investment Manager. There can be no assurance that the Fund will be able to locate, attain and exit investments that satisfy its investment objectives, or that the Fund will be able to fully invest its committed capital.
Redemption risk. The Fund’s investments are generally illiquid and therefore an investment in the Fund is intended for long-term investors able to accept the risks associated with an illiquid investment and who are able to commit their funds for the duration of the Fund Redemptions, to the extent they are permitted, may be limited, postponed or altogether suspended in certain circumstances.
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1 BlackRock, 15 August 2022. Members are subject to change. Representative of professionals with titles of Directors or above.
2 BlackRock Investment institute and World Bank, 2017. “Infrastructure: taking the long views.” October 2022. https%3A%2F%2Fwww.blackrock.com%2Fcorporate%2Fliterature%2Fmarket-commentary%2Fweekly-investment-commentary-en-us-20221010-infrastructure-taking-the-long-view.pdf
3 2022 Global Real Assets Outlook. January 2022. https%3A%2F%2Fwww.blackrock.com%2Fca%2Finstitutional%2Fen%2Fliterature%2Fwhitepaper%2F2022-global-real-assets-outlook.pdf
4 The IEA estimates that $125 trillion of investment is needed globally by 2050 to reach net zero, including $4 trillion per year into renewable power. “Net Zero by 2050,” International Energy Agency, May 2021, https%3A%2F%2Fwww.iea.org%2Freports%2Fnet-zero-by-2050
5 Such as renewable energy and energy efficiency, which may include wind, solar and waste-to-energy power production, as well as smart metering
6 AUM as of October 2022.
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