As global investments continue to shift in light of the energy transition, it looks like BlackRock’s CEO Larry Fink is placing bets — on the rise of infrastructure in private markets. The firm recently agreed to buy Global Infrastructure Partners (GIP), a leader in ports, power, and digital infrastructure projects, for $12.5 billion. This brings BlackRock’s total infrastructure assets to $150 billion globally.
The Growing Importance of Infrastructure Investment
Infrastructure investment in private markets is gaining momentum. This sector, once dominated by public spending, is increasingly attracting private capital. BlackRock’s pivot towards infrastructure investment is a reflection of a broader market trend, one with potentially substantial returns and societal impact. “Infrastructure is one of the most exciting long-term investment opportunities, as a number of structural shifts re-shape the global economy,” said Larry Fink in press coverage of the GIP deal.
The infrastructure sector, especially in emerging economies, could see a surge in investment, driven by the need for sustainable development and technological advancement. McKinsey estimates that to keep pace with global growth, the world needs to invest about $3.3 trillion annually in infrastructure through 2030. Projects in renewable energy, sustainable transportation, and digital infrastructure could be promising, offering potentially stable, long-term returns. These sectors also align with a growing emphasis on ESG goals.
Can private markets fill a $15 trillion funding gap?
Private markets could play a key role in bridging the gap in infrastructure financing. Public funds alone are insufficient to meet the global demand for new and upgraded infrastructure. In fact, the Global Infrastructure Hub estimates a $15 trillion funding gap by 2040. Here, firms like BlackRock could step in, offering the necessary capital and expertise. This shift could offer a win-win, providing investors with profitable opportunities while contributing to global economic growth and sustainability.
As the world pivots towards sustainable development, infrastructure could emerge as a key sector in the private market. This trend is not just a reflection of market dynamics but also an indicator of the changing face of global investment strategies, where profitability aligns with purpose.