BlackRock Inc. expects to spend $2.5 billion on global infrastructure deals in 2017, the most the firm has invested in a given year. The money manager is seeking opportunities in energy and power, and renewables, Jim Barry, BlackRock’s global head of the real assets group, said in an interview. A priority will be investing in Latin America including Mexico and Colombia. Allocating money for certain U.S. projects is less of a focus until President Donald Trump’s infrastructure plans take better shape. BlackRock is expanding in infrastructure as clients seek investments that are less correlated with stocks and bonds and that also protect against inflation. The company, which manages $5.1 trillion in assets, has built the business to more than $10 billion. The energy and power arenas are attractive because low oil and gas prices have constrained capital capacity for traditional market players, Barry said.
Beyond those areas, Trump’s campaign pledge to spend $1 trillion on roads, highways and bridges across the country may also present opportunities. But Barry said the firm is awaiting details from the new administration before making decisions on deploying cash.
Bonds for Bridges?
The firm currently has several hundred million dollars available to invest in transportation and social infrastructure, which includes schools, hospitals and housing, Barry said. The amount of capital needed for projects will depend on Trump’s infrastructure policy. Large privatization efforts involving ports and airports will require billions of dollars, while public-private partnerships around transport and wastewater will need a commitment of hundreds of millions, he said. “The most immediate impact the administration can have in infrastructure is investing through existing agencies and allowing them to borrow more,” he said. “The different tools available include creating models of bonds for municipal or state agencies to raise extra capital to deploy to transport agencies for short term impact.”
The potential for infrastructure spending is among the topics that the president’s Strategic and Policy Forum is tackling. Laurence D. Fink, BlackRock’s chief executive, discussed the issue during a meeting Trump had with the group on Feb. 3. BlackRock made its first foray into real assets in 2011 by entering a partnership with renewable energy infrastructure firm NTR Plc, which was run by Barry. Earlier this month, BlackRock agreed to purchase two First Reserve Corp. energy-infrastructure funds that oversee $3.7 billion in capital. The firm last year hired Pat Eilers, who oversaw Madison Dearborn’s energy, power and chemicals investment practice, to lead an expansion of direct energy and power investments. BlackRock is preparing its first fund to invest in that area in North America. While the firm will continue to build its presence in Latin America, it has also begun to invest in renewable power in Asia, Barry said.