BlackRock raises $4.5B for renewables investment

The world's largest asset manager, BlackRock Inc., has raised $4.5 billion to invest in infrastructure assets that it believes would profit from a global shift to low-carbon energy.

According to BlackRock's head of diversified infrastructure, Mark Florian, the firm is aiming for a total of $7.5 billion for its new infrastructure fund. The fund will begin investing after reaching its initial close of $4.5 billion.

A statement from the company says that public and private pension funds, sovereign wealth funds, ultra-high-net-worth individuals, and insurance firms have all put money into the fund.

Investors like utilities and other infrastructure assets because they pay out regular cash flows and do fairly well during recessions. Florian says that they are still interested even though the outlook for alternative assets like private equity is getting worse because interest rates are going up and there is a chance of a recession. BlackRock’s third and most recent infrastructure fund raised $5.1 billion in 2020.

Preqin, a data company, says that the amount of investor money going into the sector will grow from $864 billion at the end of 2021 to $1.87 trillion in 2026.

“People haven’t worried about inflation for a long, long time—now they are,” Florian said. "BlackRock mitigates against the impact of inflation and uses long-term fixed-rate debt to protect against interest rate rises. The fund and the assets it will invest in are set up to survive well in an inflationary time.”

BlackRock is one of the world's major energy investors, with holdings in publicly traded companies such as Exxon Mobil Corp. and ConocoPhillips. Its private market exposure to the sector has risen, and its infrastructure platform now manages more than $50 billion in client assets across a variety of funds.

BlackRock began investing in renewable energy in 2012 and has since expanded its position. It has put money into companies like Calisen, which instals smart metres in the UK, and Vanguard Renewables, which makes natural gas in the US.

Some groups have criticised BlackRock for putting ESG issues, like investing in renewable energy sources, ahead of making money for shareholders.

Missouri took $500 million out of BlackRock Inc.'s pension funds earlier this month. The state said that the company put "a liberal political agenda ahead of the financial interests of their customers."

Louisiana's treasurer also said in October that the state would withdraw $794 million from BlackRock funds because the firm's alleged anti-fossil-fuel policies were harming the state's energy industry.

Source: Bloomberg

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