First Reserve Energy Infrastructure Funds Joins BlackRock’s $10 Billion Infrastructure Platform
First Reserve to Advance Leading Private Equity Franchise
BlackRock, Inc. (NYSE:BLK) today announced that it has entered into a definitive agreement to acquire First Reserve Energy Infrastructure Funds (FREIF), the equity infrastructure franchise of First Reserve, a leading global private equity firm exclusively focused on energy. The Energy Infrastructure team will join BlackRock’s Infrastructure Investment platform.
The Energy Infrastructure team at First Reserve manages approximately $3.7 billion in committed capital across two funds with a global investment footprint, including investments in North America, Latin America, Europe and Southeast Asia. Led by Mark Florian, the team has announced or closed 21 portfolio companies since 2010, almost all negotiated on an exclusive basis. The global team of 37 investment professionals and support staff will join BlackRock when the deal closes, providing for continuity of strategy and portfolio management.
Governments and businesses around the world have become increasingly aware of the need to invest in infrastructure and the role that sophisticated investors can play in the development process. This transaction enables BlackRock to better connect its clients with energy infrastructure projects that can provide income generation, diversification and inflation protection.
“Six years ago, we set out to create one of the leading infrastructure investment platforms in the world. Since then, we’ve built world class franchises in Renewable Power and Infrastructure Debt and leading Latin American Infrastructure and Infrastructure Solutions businesses,” said Mark McCombe, Global Head of BlackRock Alternative Investors. “The global energy infrastructure market presents a unique investment opportunity for clients seeking uncorrelated sources of return with attractive yields.”
As part of the BlackRock Infrastructure platform, the Energy Infrastructure team plans to continue its strategy of targeting equity investments in projects and companies with contracted revenue, visible yield streams and long-term capital appreciation. Further, the team will continue to act as a strategic partner to its portfolio companies, management teams and counterparties through investments in four core sectors: Contracted Power, Contracted Midstream, Other Contracted Energy Assets and Regulated Transmission and Distribution.
Alex Krueger, President and Co-CEO of First Reserve commented, “We are pleased that a global organization of BlackRock’s quality has acknowledged the work of First Reserve and the FREIF team. We believe this acquisition by BlackRock will serve the FREIF platform and its investors well. First Reserve is committed to making this a smooth transition for our investors, and will remain devoted to pursuing attractive opportunities throughout the energy value chain through our private equity funds.”
BlackRock’s Infrastructure platform will manage approximately $14 billion in client assets when the transaction closes. Backed by BlackRock’s market-leading risk management, the Infrastructure platform provides access to sectors and geographies undergoing fundamental change, where BlackRock sees opportunity to create value for investors.
Jim Barry, Global Head of BlackRock’s Real Assets Group, added, “The development of a Global Energy Infrastructure platform has been a strategic priority for BlackRock. The team from First Reserve has a strong reputation in the energy infrastructure industry and their investment strategy strongly complements our existing capabilities. Additionally, having worked together on recent transactions, we have found a strong cultural fit.”
Mark Florian, Head of First Reserve Energy Infrastructure Funds, said, “Given our past work together and their success in building out the Infrastructure platform, we believe that a transition to BlackRock can provide the perfect place to take our energy infrastructure franchise to the next level. We are excited that FREIF’s investors will be able to receive ongoing, long-term benefit from what we believe are complementary strengths, augmenting the team’s energy infrastructure expertise with BlackRock’s world-class capabilities and global network.”
The transaction is subject to customary closing conditions and is expected to close by the end of the second quarter of 2017. The financial impact of the transaction is not material to BlackRock earnings per share. Terms were not disclosed.
BlackRock is a global leader in investment management, risk management and advisory services for institutional and retail clients. At December 31, 2016, BlackRock’s AUM was $5.1 trillion. BlackRock helps clients around the world meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. As of December 31, 2016, the firm had approximately 13,000 employees in more than 30 countries and a major presence in global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa.
First Reserve is a leading global private equity investment firm exclusively focused on energy, spanning the energy spectrum from upstream oil and gas to processing and distribution, including resources, equipment and services, and midstream and downstream. With nearly 35 years of industry insight, investment expertise and operational excellence, the Firm has cultivated an enduring network of global relationships and raised approximately USD $31 billion of aggregate capital since inception. First Reserve has completed approximately 600 transactions (including platform investments and add-on acquisitions), creating several notable energy companies throughout the Firm's history, and its portfolio companies operate on six continents.