Infra to power BlackRock Real Assets’ $100bn by 2025 AUM target

Currently sitting at $70bn, the majority of this growth is to come from the asset class, particularly in Asia, global head Anne Valentine Andrews tells us.

Anne Valentine Andrews
Anne Valentine Andrews

BlackRock Real Assets is planning to increase its assets under management from $70 billion to $100 billion by 2025, global head Anne Valentine Andrews – one of the 60 most influential women in private markets – has told Infrastructure Investor.

The manager is aiming to reach the goal in the next “three to four years”, Valentine Andrews said, with the growth planned across its equity and debt platforms. The debt side, a majority of which is in infrastructure, recently reached $20 billion and saw BlackRock reach a $1.67 billion close on the  Global Infrastructure Debt Fund in June, its first commingled vehicle targeting higher-yielding infrastructure debt.

Overall, Valentine Andrews said the real assets business is currently split broadly equally between infrastructure and real estate. However, she expects infrastructure to take the lead in the $100 billion target. When the BlackRock Real Assets unit was formed in February 2016, infrastructure accounted for $7.5 billion of its $29 billion of assets under management.

“Infrastructure will go ahead of real estate, just given the strategies that we have and the demand that we’re seeing, particularly on the back of the energy transition and sustainability,” Valentine Andrews said.

As a result, BlackRock’s pathway to reaching $100 billion will include continuing both its Global Renewable Power Fund series, the third of which closed on $4.8 billion in April, and its Global Energy and Power Infrastructure Fund series. The latter were bought from First Reserve in 2017, with the third vintage in the series closing on $5.1 billion in April 2020.

Valentine Andrews reiterated plans revealed by predecessor Jim Barry, who told Infrastructure Investor in February that the group was planning to launch an open-end infrastructure fund with a broader focus than just the energy sector.

“It’s one of the trends we’ve seen on the real estate side and we’ve been experts at managing these big, permanent capital vehicles over a long period of time,” she said. “We’re also seeing demand for that on the infrastructure side. It goes to the maturation of the asset class and really making sure the correct assets are held in the correct vehicles. It will be broad infrastructure but with a theme of sustainably building the future.”

Looking eastwards

Last week, the firm hired Valerie Speth, formerly Asia-Pacific chief executive for renewables developer juwi, as a new managing director for BlackRock’s APAC renewables team. Speth will soon be joined by a host of others, with BlackRock hiring and relocating staff from its infrastructure debt unit and its global infrastructure solutions unit (its fund of funds business). In all, BlackRock expects to treble or quadruple its Asian infrastructure team in the near term.

Valentine Andrews said expansion in the region had been a “strategic priority” for the group in recent years. This is despite BlackRock having no infrastructure investments in Asia when the real assets platform was created in 2016. The business, particularly on the renewables side, has taken huge leaps since. Global head of renewable power David Giordano told Infrastructure Investor after the close of GRP III that as much as 40 percent of the fund could be deployed in the region.

BlackRock has raised regionally dedicated funds in the past – it launched the Renewable Income UK and Renewable Income Europe funds in 2014 and 2015, respectively – though Valentine Andrews remains keen on BlackRock’s current approach for now.

“The renewable income strategies were incredibly successful, and they came off clients coming to us, which is actually how the debt business started as well,” she said. “We don’t have any immediate plans to do that in Asia. There is a lot of demand for Asian infrastructure, but we’re going to be doing it for the next little while out of the vehicles we’ve already got. People want the exposure as part of a diversified exposure. I never say never as it’s still early days, but we’re doing it mostly through our global vehicles.”

The exception to this is the Climate Finance Partnership, the blended finance fund that will invest in renewables, energy efficiency, transmission and electric mobility assets in Asia, Latin America and Africa. It reached a $250 million first close this month, following commitments from four institutions and a first-loss tranche from government bodies and philanthropic institutions.

The vehicle is targeting $500 million, and Valentine Andrews said “it’s garnering a huge amount of interest” from both European and Asian pensions and insurance companies. She added that aside from the catalytic capital involved, the fundraising process is not dissimilar to how BlackRock raises and deploys its other funds.

Long-term investing

Although some LPs have expressed ESG-related concerns about investing in BlackRock’s GEPIF series due to some of its focus on oil- and gas-related assets, the franchise continues to perform strongly. The $5.1 billion raised by GEPIF III is BlackRock’s largest alternatives fundraise, while its 2014-vintage predecessor was generating a net IRR of 21.7 percent as at the end of last year, according to documents from the Teachers’ Retirement System of the City of New York.

GEPIF III, however, has recently invested in more energy transition-based assets. It acquired UK smart meter group Calisen for £1.4 billion ($1.9 billion; €1.6 billion) alongside Goldman Sachs. It also partnered with Valero in March to bring carbon capture and storage technologies to pipelines in the US.

“As big strategics evolve, we will evolve with them,” Valentine Andrews said. “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.”

Elsewhere in the real assets unit, Valentine Andrews pointed to the “explosive” growth of the aforementioned global infrastructure solutions business. BlackRock is currently raising Global Infrastructure Solutions 4, a fund of funds targeting €800 million, according to Infrastructure Investor data.

“People want to understand the drivers of return and risk and add on what they don’t have,” Valentine Andrews explained. “It’s a lot of data and analytics and portfolio management. That’s a really big growth area.”