BlackRock plans its largest ever alternative investment fundraiser

BlackRock Inc is planning to raise $3.5 billion for investments in energy infrastructure in what is poised to be its largest alternative investment fund yet, an executive at the world’s largest asset manager told Reuters.

The company announced on Wednesday that it has already raised $1.5 billion for the Global Energy and Power Infrastructure Fund III. The private fund will focus on operating infrastructure, such as power plants, pipelines and wind farms, in developed markets, potentially including the United States.

Mark Florian, BlackRock’s global head of its energy and power infrastructure team, said there is growing demand for new infrastructure as countries around the world shift from coal and nuclear power sources to natural gas and renewable energy.

He said large utilities and global energy companies are outsourcing the management and development of infrastructure, creating an opportunity for investment organizations such as his that want to provide capital.

“The needs are just getting bigger,” Florian said in a telephone interview.

BlackRock, known more for its stock and bond funds, has been building up its infrastructure unit, which it started in 2011. Chief Executive Officer Larry Fink has told analysts this year that he expects so-called illiquid alternative investments, which include private equity and typically come with higher fees than its other funds, to “be one of the more significant” drivers for BlackRock’s business over the next few years.

The latest fundraising comes just over a year after BlackRock closed a deal to buy First Reserve Corp’s Energy Infrastructure Funds unit, bringing over some of that company’s existing funds and employees.

Overall, BlackRock manages $6.3 trillion in assets, including $41 billion on the “real assets” team that includes the energy infrastructure business.

reuters.com