BlackRock rebrands GEPIF strategy with new $7.5bn fund

BlackRock Real Assets has launched a rebranded vintage of its Global Energy & Power Infrastructure Fund series, targeting $7.5 billion.

The new fund, known as Global Infrastructure Fund IV, follows on from the 2018-vintage GEPIF III, which raised $5.1 billion in April 2020. The series originally began in 2009 under the management of First Reserve, before BlackRock acquired the business in February 2017.

Under its new umbrella, GIF IV will also target sectors such as digital infrastructure (10-15 percent of the asset mix) and transport and logistics (10-15 percent), according to documents from the New Mexico State Investment Council, which has committed $100 million to the vehicle. Those sectors join the more traditional sectors of the GEPIF series such as energy and environmental (30-50 percent), low carbon power (20-40 percent) and regulated utilities (5-10 percent).

“Fund IV will be more broadly diversified than prior funds including sectors outside the areas of traditional energy and power, but still capitalising on many of the same themes and relationships established by the team over the last decade,” a note from NMSIC’s consultant Townsend Group stated.

Despite the fundraising success of GEPIF III, market sources have told Infrastructure Investor that the GEPIF series had become more difficult to market to ESG-conscious investors, particularly in Europe, because of its exposure to natural gas.

In its presentation to NMSIC, BlackRock said this shift has occurred as a result of the energy convergence of the transportation and digital sectors, such as electrification of transport and the energy intensity of the digital world. GEPIF III, alongside Goldman Sachs Asset Management, completed the take-private deal of UK smart metering company Calisen in 2020, which it classes as a digital infrastructure investment. The vehicle, which is 96 percent deployed, made its last investment in July, with the acquisition of US renewable natural gas group Vanguard from Vision Ridge.

As is consistent with its predecessor funds, GIF IV will target net returns of 10 percent and a yield of 7 percent. GEPIF III and II are generating an average 13.1 percent IRR, according to NMSIC, which has committed to the two previous vehicles.

“The performance of the GEPIF II and III vintages SIC owns has been sound, benefitting from lessons learned from Fund I which was comparatively weak (-0.6 percent),” the documents stated.

The strategy is led by Mark Florian, who also led the vintage when it was part of First Reserve. Reflecting the broadening of the strategy, Florian’s job title has changed from head of global energy & power infrastructure funds to global head of diversified infrastructure.

BlackRock declined to comment on the fund or the changing name of the fund. However, in an interview with Infrastructure Investor last year, when pressed on the future of the GEPIF series and its move to lower-carbon assets, BlackRock’s global head of real assets Anne Valentine Andrews responded: “As big strategics evolve, we will evolve with them. It’s just a reflection of the market opportunity. I think it’s a natural reflection of where the world’s moving. The same investing style of looking for long-term, contracted arrangements remains.”