by Pen Pendleton
The public relations value of infrastructure investing just took a giant leap forward. BlackRock and its newly-acquired infrastructure fund manager, Global Infrastructure Partners (GIP), raised the largest ever fund to finance development of AI data power and storage centers, a key component for advanced public broadband services. The fund, dubbed the Global AI Investment Partnership (GAIIP), thus re-defines the infrastructure asset class.
BlackRock CEO Larry Fink has been working hard to pivot his firm’s reputation away from ESG in the wake of criticism from red state treasurers and lobbyists. To that end, GIP is proving a valuable PR tool, not to mention delivering $80 billion in new client assets. The lesson should be clear to others investing in the $300 billion infrastructure segment: no other asset class better demonstrates capitalism’s value to the real economy and shared economic growth.
For too long, infrastructure investing had been an investment backwater. Traditionally, infrastructure’s uncorrelated returns were a safe but comparatively modest strategy. Portfolios were dull: roads, bridges, water systems and mass transit. Growth capital flowed elsewhere. The institutional investors who participated consistently under allocated to infrastructure compared to their equity and fixed income strategies.
Unsurprisingly then, infrastructure managers rarely marketed themselves to the wider public. They rarely participated in building support for private capital with rate payers, regulators, voters and elected officials, the stakeholders who can make or break government and utility capital spending. Given the recent anti-woke consensus, managers may have also missed opportunities for burnishing their reputations as Wall Street’s public service investors.
To be sure, some managers have seized on the green energy transition as themes for web site content and investor relations initiatives. But that website content and one-off initiatives rarely moved the needle.
It took Larry Fink to bring infrastructure into the mainstream with BlackRock’s $12.5 billion acquisition of GIP, and the $30 billion GAIIP partnership. AI represents a $184 billion market that is projected to surpass $825 billion by 2030. With BlackRock’s new high-profile partners Nvidia, Microsoft and Abu Dhabi, Fink aligns the asset class with a supercharged high growth technology.
At the same time, Fink has found a communications solution to what was increasingly becoming a distraction. Now, he can replace every reference to ESG with a new term: infrastructure.