BlackRock now directs its tentacles towards infrastructure

The unexpected entry of the largest asset manager in the world, BlackRock, as the main shareholder of the Spanish gas company Naturgy with 20% of the capital, has caused a stir in the political and financial world when the controversy over the purchase of up to 9 % of Telefónica by the public company Saudi Telecom.

In this case, the American manager, which moves its clients' money worth 9.42 billion dollars (8.64 billion euros) in the markets, had access to Naturgy indirectly as a result of the purchase on December 12. January from Global Infrastructure Partners (GIP), the world's largest independent infrastructure manager with more than $100 billion in assets under management.

Until the moment of the acquisition, GIP owned 20% of the capital – valued at almost 5,000 million euros – of the gas company chaired by Francisco Reynés.

BlackRock is known for being the world's largest investor in stocks.

In the Spanish market it has assets worth more than 24,000 million euros, which represents almost 4% of the capitalization of the companies in the Ibex 35 index. It is present in 19 of the 35 companies on the selective stock market and its weight stands out in the energy sector.

It appears as the owner of 5.39% of the capital of Iberdrola - only behind Qatar Investmen Authority with 8.69% -, 5.42% of Enagás, 4.99% of Redeia and owns 5.47% of the shares of the oil company Repsol.

Its tentacles also expand through banks, construction companies and infrastructures of the Spanish stock market.

The American manager's interest in energy and infrastructure has been around for a long time.

Rich Kushel, director responsible for BlackRock's portfolio management team, noted in a recent statement that they had invested more than $320 billion (€293.6 billion) in public energy companies, including investments in traditional energy sectors such as oil and gas. gas, and renewable energies.

“We also invest in projects such as pipelines, generation facilities and new technologies and innovations that will help drive the global economy, now and in the future,” he stressed.

And in the list of the 25 largest holdings of the manager in the world are the oil companies Chevron, of which it owns 7.02% of capital, and Exxon Mobil with 6.83%.

Of course, its big bets are on technological stocks such as Apple, Microsoft, Amazon and Google.

With these gigantic figures moved by the firm, founded in 1988 by its current president, Larry Fink, it is common to believe that it is the owner of this immense fortune in the markets.

But it's not like that.

BlackRock makes these investments with the money that its clients (individuals and institutions) put in its very long list of investment funds, many of them passively managed that limit themselves to replicating the evolution of the indices.

To achieve the same profitability as the indices, they buy the shares and achieve these impressive percentages of the companies' capital, as occurs with other managers such as its main competitor, Vanguard.

Ignacio Cantos, investment director partner at atl Capital, considers that the recent purchase of GIP is different from the positions they have for their exchange-traded investment funds (ETF) with passive management that is dedicated to replicating the indices.

"Although BlackRock reaches large percentages of the capital, when it comes to passive funds, it usually does not have any influence on the progress of the company, they do not exercise their voting rights or place their representatives on the boards of directors."

And he adds: “In the case of GIP and, therefore, in Naturgy, things are different and the two directors that the infrastructure manager that they have acquired already had will influence and maintain,” he explains.

BlackRock's own director of operations, Ron Goldstein, pointed out in a recent interview that the Spanish Government should not “fear” for its 20% stake in Naturgy.

Reynés himself recognized that BlackRock is an investor that gives stability to companies.

However, the purchase of GIP represents a change, since BlackRock wants to create a large infrastructure group after absorbing GIP, for which it will pay 12.5 billion dollars (11.46 billion euros), most of it through shares of the manager itself. — and will maintain the old management team.

And the result will be a combined business of $150 billion, a figure to which BlackRock contributes $50 billion in client infrastructure assets under management.

In addition to Naturgy, GIP has stakes in 40 companies such as airports (Gatwick, Edinburgh and Sydney Airports);

data centers (CyrusOne);

water (Suez), renewable (Clearway, Vena and Atlas) or railway (Pacific National and Italo) businesses.

In addition, BlacRock recently announced the purchase of 20% of the Spanish company Recurrent Energy, owned by Canadian Solar, for 500 million euros that will be used to develop the progress of the renewable company.

More income

The American bank Goldman Sachs, in a recent report in the heat of the GIP purchase, supports this operation and maintains its purchase recommendation for BlackRock shares.

He considers that this entry into more illiquid markets, such as venture capital, improves the overall commission income, which in the world of funds is under great pressure due to strong competition, especially in passive management.

Commissions on BlackRock's unlisted businesses, such as credit and infrastructure, would rise to 11% of total income for this concept compared to the current weight of 6%.

The American manager justifies the creation of this conglomerate because they foresee that infrastructure will be one of the fastest growing segments of the private sector in the markets in the coming years and they also argue that private capital will be required in these investments in the face of large government deficits. .

Curiously, the origins of BlackRock in the late eighties are those of a fund manager that was dedicated to investing exclusively in bonds.

Two milestones were key in the step towards the world of stocks that now represent slightly less than the 8.46 billion euros managed by the American firm.

In 2006 it acquired Merrill Lynch Investment Managers, specialized in variable income.

The other decisive step was the purchase in 2009 of Barclays Global Investors, the leader in the ETF business at that time.

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