BlackRock raises $4.5 billion for infrastructure investments

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(Bloomberg) – BlackRock Inc., the world’s largest fund manager, has raised $4.5 billion to invest in infrastructure assets it says will benefit from a global transition to low-emission energy of carbon.

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The company is targeting up to $7.5 billion for its new infrastructure fund overall, BlackRock’s head of diversified infrastructure Mark Florian said in an interview. Having reached a first close of $4.5 billion, the fund will begin investing.

Public and private pension funds, sovereign wealth funds, ultra-high net worth individuals and insurance companies have invested in the fund, the company said in a statement.

Investors like the steady cash flow and relatively strong performance of utilities and other infrastructure assets during a downturn. They remained enthusiastic even as the outlook for alternative assets like private equity darkens amid rising interest rates and the threat of recession, Florian said. BlackRock’s third and final infrastructure fund raised $5.1 billion in 2020.

The amount of investor liquidity targeting the sector is expected to reach $1.87 trillion by 2026, up from $864 billion at the end of 2021, according to data provider Preqin.

“People didn’t worry about inflation for a long, long time – now they do,” Florian said. BlackRock mitigates the impact of inflation and uses long-term fixed rate debt to hedge against interest rate hikes, he added. The fund and the assets it will invest in are “configured to survive well in times of inflation”.

Energy exposure

BlackRock is one of the world’s largest investors in the energy sector, with stakes in publicly traded companies like Exxon Mobil Corp. and Conoco Phillips. Its exposure to the sector through private markets has grown and its infrastructure platform now manages over $50 billion in client assets across a range of funds.

BlackRock started investing in renewable energy in 2012, since then it has stepped up its presence. Among its investments are stakes in UK smart meter installer Calisen and US natural gas producer Vanguard Renewables.

BlackRock has been criticized by some groups for prioritizing ESG concerns, like investing in sustainable energy sources, over shareholder profits.

Earlier this month, Missouri withdrew $500 million in retirement assets from BlackRock Inc., criticizing the company for “putting a woke political agenda above the financial interests of its clients.”

Louisiana’s treasurer also said in October that his state would withdraw $794 million from BlackRock’s funds on the grounds that the company’s alleged anti-fossil fuel policies were damaging the state’s energy industry.

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