Jan 12, 2024
Larry Fink’s $12.5 Billion GIP Deal Has Roots in 1980s First Boston
, Bloomberg News
(Bloomberg) -- Larry Fink was on the hunt for another transformational deal for BlackRock Inc., and he didn’t need to search far for his target.
The 71-year-old chief executive officer set his sights on Global Infrastructure Partners, run by Bayo Ogunlesi, 70, a colleague dating back to 1980s Wall Street.
“We are both refugees from First Boston,” Fink said Friday in a Bloomberg Television interview, sitting alongside Ogunlesi. “We have a common culture. We laugh about what we learned at First Boston over dinners.”
While they kept in touch over the ensuing decades, the negotiations that led to Friday’s announcement that BlackRock will buy GIP for about $12.5 billion came together in only a few months for the New York-based firms, according to people with knowledge of the matter. The deal, which is expected to be completed in the third quarter, is poised to be the biggest-ever acquisition of an alternative-asset manager.
BlackRock, a $10-trillion behemoth of money-management, wanted to expand deeper into the fast-growing market for private assets and was hearing demand from big institutional clients, such as pensions and sovereign wealth funds, for the kinds of long-term investments that can generate higher yields than public markets. To Fink, that meant infrastructure was on the cusp of a massive upswing worldwide.
After a late September dinner with Ogunlesi at Fasano, an Italian restaurant in Midtown Manhattan, Fink told BlackRock Chief Financial Officer Martin Small that the conversation reminded him of discussions with Stan O’Neal on another milestone in BlackRock’s history: the 2006 acquisition of Merrill Lynch Investment Managers, the people said.
Fink has stressed the importance of company culture to the success of acquisitions and, in this one, GIP’s executives will become some of BlackRock’s largest stockholders, with 12 million shares. Ogunlesi will join BlackRock’s board and global executive committee, each GIP seller will agree to vote in line with BlackRock’s board, and GIP employees will retain financial incentives tied to existing funds, according to an investor presentation.
“We like the fact that BlackRock thinks their stock is undervalued, and the fact that we are taking 75% in BlackRock stock tells us we also think it’s undervalued,” Ogunlesi said in a conference call with analysts.
He joked that clients have said they believe the deal is good for them, second for BlackRock and third for GIP.
“Now, I wish I had known they’d put BlackRock ahead of GIP, because then I would have asked for a higher price,” he said, “but it’s all worked out very well.”
Small and Raj Rao, GIP’s president and chief operating officer, played key roles in hashing out the details of the transaction. After Fink and Ogunlesi shook hands on the deal, senior executives from both firms dined together in December at BlackRock’s Hudson Yards headquarters.
The stories kept coming about their Wall Street banking days.
“Maybe it’s the First Boston DNA that all of us have and share,” Ogunlesi said in an interview with Bloomberg Television. “Maybe that’s what does it.”
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