BlackRock CEO Larry Fink on GIP deal: The future in private markets will be infrastructure

HOLDERS. JOINING US RIGHT NOW IN A FIRST ON CNBC INTERVIEW IS BLACKROCK CEO LARRY FINK AS THE NEWS IS JUST CROSSING THE TAPE. GOOD MORNING. >> GOOD MORNING, ANDREW. HAPPY NEW YEAR. HAPPY NEW YEAR TO BECKY AND JOE. >> THERE HAS BEEN SPECULATION FOR MONTHS THERE WOULD BE A MAJOR TRANSACTION IN THE FUTURE OF BLACKROCK. A LOT OF PEOPLE SPECULATED YOU WOULD BUY A PRIVATE EQUITY FIRM. THIS IS A DIFFERENT DEAL. YOU ARE ZIGGING AND OTHERS ARE ZAGG ZAGG ZAGGING. THIS IS GOING TO MAKE YOU ONE OF THE LARGEST INFRASTRUCTURE INVESTORS IN THE WORLD. >> IT PUTS US IN THE TOP FEW. THANK YOU. LET ME BE CLEAR. WE WERE NOT LOOKING AT ANY PRIVATE EQUITY FIRMS. WE BELIEVE THE FUTURE IN THE PRIVATE MARKETS INFRASTRUCTURE. IF YOU THINK ABOUT BLACKROCK, OVER 65% OF OUR ASSETS ARE RETIREMENT ASSETS. WHAT IS A BETTER ASSET THAN LONG DURATION ASSETS AND HIGH COUPON AND INFLATION PROTECTED? YOU OVERLAY THE NEEDS OF GOVERNMENTS AND COMPANIES. I HAVE BEEN LONG ADVOCATES THAT DEFICITS MATTER. THE FUTURE OF GOVERNMENTS FUNDING THEIR DEFICITS ON THEIR OWN BALANCE SHEETS IS MORE AND MORE DIFFICULT. WE'RE IN A CONVERSATION WITH MANY GOVERNMENTS OF DOING MORE PUBLIC-PRIVATE TRANSACTIONS. WE ARE SEEING MORE AND MORE CORPORATIONS, INSTEAD OF SELLING DIVISIONS, THEY ARE SELLING BLOCKS OF ASSETS. SOMETIMES 100% AND SOMETIMES 50% AND BUILDING THE INFRASTRUCTURE. WE ALL KNOW THE NEED OF RE-CALIBRATING OUR POWER GRID AS WE DIGITIZE EVERYTHING. WE KNOW MORE AND MORE COUNTRIES ARE FOCUSING ON ENERGY INDEPENDENCE AND SOME OF THEM ARE FOCUSED ON DECARBONIZATION. ACROSS THE INVESTMENTS, WE ARE TALKING TRILLIONS OF DOLLARS. WE BELIEVE THE MACRO TREND IN THE FUTURE IS MUCH HEAVY RELIANCE TO CO- INVEST WITH COMPANIES AND GOVERNMENTS WITH INFRASTRUCTURE. WE HAVE HAD A LONG RELATIONSHIP WITH GIP. >> THE FIRST BOSTON DAYS? >> YES. WE ALL LEFT FIRST BOSTON. WE WERE PARTNERS AT FIRST BOSTON. THIS CAME TOGETHER QUICKLY. WE HAD DINNER TOGETHER IN SEPTEMBER AND WE SAW THE MERITS OF IT. WE HAD OUR KEY PARTNERS TOGETHER IN OCTOBER. WE MOVED RAPIDLY. >> THE LEAD DIRECTOR AT GOLDMAN SACHS IS STEPPING DOWN IN THAT ROLE? >> AT THE TIME OF CLOSING, RIGHT AFTER CLOSING, HE WILL JOIN BLACKROCK'S BOARD. HE WILL BE STANDING DOWN FROM THE GOLDMAN SACHS BOARD. HE HAS BEEN THE LEAD DIRECTOR. HE HAS BEEN ON THE GOLDMAN SACHS BOARD NOW FOR 12 YEARS. I KNOW HE'S SAD TO LEAVE A GREAT FIRM, BUT HAPPY TO BE PART OF THE NEW FIRM. >> HOW DOES THIS CHANGE BLACKROCK? THERE WAS A TRANSFORMATIONAL DEAL WITH BGI AND BROUGHT IN ISHARES YEARS AGO. THAT WAS TRANSFORMATIONAL. YOU PUT THIS IN THAT SAME KIND OF BUCKET OR CONTEXT. >> I WOULD PUT IT IN THE CONTEXT WHEN WE BOUGHT BGI AND ISHARES IN IT. TODAY, ISHARES HAS $3.5 TRILLION. THESE ARE LONG TERM TRENDS WE SEE IN HOW THE MARKETS EVOLVE. MUCH OF THIS WE MADE A FUNDAMENTAL BELIEF THAT THE WORLD'S CAPITAL MARKETS AND THIS IS GOOD FOR CNBC THAT IT WILL BE A LARGER COMPONENT OF ECONOMIC ACTIVITY ACROSS COUNTRIES AND ACROSS THE GLOBE. AS I SAID, IF WE ARE GOING TO REALLY ELEVATE OUR INFRASTRUCTURE AS A WORLD AND THE NEED FOR STRONGER, BETTER AIRPORTS AND POWER GRIDS, AND INFRASTRUCTURE AS AN ASSET CLASS MUST GROW. WE BELIEVE WE ARE SEEING THAT. WE ARE MAKING A LARGE STATEMENT THAT WE BELIEVE IN THE PRIVATE MARKETS AND THE FUTURE OF GROWTH AND INFRASTRUCTURE WILL BE FASTER THAN ALMOST ANY OTHER. >> IN THE BET YOU CAN GROW THIS WITH THE INVESTORS THAT PUT YOU IN THE PLACE TO COMPETE AGAINST THE BROOKFIELDS OF THE WORLD? >> OUR INVESTORS HAVE BEEN NOTIFIED. THEY ARE RIGHT IALREADY EXCITED THE TRANSACTION. COMBINED BLACKROCK AND THE GIP TEAM WILL HAVE OVER $150 BILLION IN INFRASTRUCTURE. WE SEE MORE AND MORE OPPORTUNITY. WE'RE WORKING RIGHT NOW WITH TWO OR THREE MAJOR COMPANIES THAT ARE LOOKING TO RESTRUCTURE THEMSELVES. WE ARE TALKING $5 BILLION OF EQUITY NEEDED TO DO THE DEALS. WE ARE IN CONVERSATION WITH THE GOVERNMENT THAT THEY ARE LOOKING TO TRANSFORM SOME OF THE POWER GRIDS. ALL OF THESE THINGS ARE REQUIRING NOT A FEW HUNDRED MILLION, BUT BILLION DOLLARS. THE NEED IS GREAT AND THE POWER OF GIP AND BLACKROCK REALLY ALLOWS US TO BE IN THE FRONT OF THE PACK. >> HOW SHOULD INVESTORS THINK ABOUT THIS THIS MORNING IN TERMS OF ALTERNATIVES? A SMALL PIECE OF BIG PIECE OF THE EARNINGS THE FUTURE? WHAT MULTIPLE DO THEY WANT TO APPLY TO THIS BUSINESS RELATIVE TO THE ISHARES BUSINESS? >> IT DOUBLES OUR FEE RELATED REVENUES RELATED TO THE PRIVATE MARKET. IT PUTS US OVER $1.5 BILLION. THAT IS A BIG BLOCK. IT IS STILL SMALL TO THE $18 BILLION REVENUE PLATFORM, BUT IT IS GIVING US A LARGER ENGINE. ISHARES CROSSED OVER $1.5 BILLION IN REVENUE. THE PLATFORMS IN MY MIND IDENTIFY THE STRENGTH OF THE BLACKROCK AND WE ARE ABLE TO BRING THE TOTALITY OF INVESTMENT IDEAS WITH THE INVESTMENT TECHNOLOGY. THIS GIVES US A MUCH BIGGER CONVERSATION BEYOND PUBLIC SECURITIES AND PUBLIC EQUITY AND PUBLIC DEBT. INVESTMENT TECHNOLOGY AS

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Id: cTT_FlYYNtU

Length: 6min 55sec (415 seconds)

Published: Fri Jan 12 2024