BlackRock Inc. buys First Reserve energy infrastructure funds

Written By: Stratton Report
February 1, 2017

On February 1, BlackRock, Inc. announced that it will acquire First Reserve Energy Infrastructure Funds, the equity infrastructure franchise of First Reserve, a private equity firm focused on energy.

According to BlackRock, the 37 investment professionals of the Energy Infrastructure team at First Reserve, which manages approximately $3.7 billion in capital across two funds with investments in North America, Latin America, Europe and Southeast Asia will join BlackRock’s infrastructure investment platform.

BlackRock stressed that it hopes this transaction will enable it to better connect its clients with energy infrastructure projects that can provide income generation, diversification and inflation protection.

Mark McCombe, Global Head of BlackRock Alternative Investors noted: “Six years ago, we set out to create one of the leading infrastructure investment platforms in the world. Since then, we’ve built world class franchises in Renewable Power and Infrastructure Debt and leading Latin American Infrastructure and Infrastructure Solutions businesses. The global energy infrastructure market presents a unique investment opportunity for clients seeking uncorrelated sources of return with attractive yields.”

BlackRock stressed that as part of its infrastructure platform, the Energy Infrastructure team will continue its strategy of targeting equity investments in projects and companies with contracted revenue, visible yield streams and long-term capital appreciation and act as a strategic partner to its portfolio companies, management teams and counterparties through investments in contracted power assets, in contracted midstream assets, in other contracted energy assets and in regulated transmission and distribution.

Alex Krueger, President and Co-CEO of First Reserve commented:

 We are pleased that a global organization of BlackRock’s quality has acknowledged the work of First Reserve and the FREIF team. We believe this acquisition by BlackRock will serve the FREIF platform and its investors well. First Reserve is committed to making this a smooth transition for our investors, and will remain devoted to pursuing attractive opportunities throughout the energy value chain through our private equity funds. 

BlackRock claimed that its infrastructure platform will manage approximately $14 billion in client assets when the transaction closes.

Jim Barry, Global Head of BlackRock’s Real Assets Group, observed: “The development of a Global Energy Infrastructure platform has been a strategic priority for BlackRock. The team from First Reserve has a strong reputation in the energy infrastructure industry and their investment strategy strongly complements our existing capabilities. Additionally, having worked together on recent transactions, we have found a strong cultural fit.”

Mark Florian, Head of First Reserve Energy Infrastructure Funds, explained: “Given our past work together and their success in building out the Infrastructure platform, we believe that a transition to BlackRock can provide the perfect place to take our energy infrastructure franchise to the next level. We are excited that FREIF’s investors will be able to receive ongoing, long-term benefit from what we believe are complementary strengths, augmenting the team’s energy infrastructure expertise with BlackRock’s world-class capabilities and global network.”

The transaction is expected to close by the end of the second quarter of 2017.