BlackRock Just Closed Its Largest Alternative Fund Yet

The asset management giant raised $5.1 billion for its third energy and power infrastructure fund.

Blackrock headquarters. (Gabriella Angotti-Jones/Bloomberg)

Blackrock headquarters.

(Gabriella Angotti-Jones/Bloomberg)

BlackRock has closed its third global energy and power infrastructure fund after raising $5.1 billion, surpassing the fund’s $3.5 billion target and original hard cap of $4.5 billion.

The fund is the biggest alternative investment vehicle that BlackRock has ever raised, according to the firm’s statement announcing the fund close on Wednesday. The asset management giant had $7.43 trillion in assets under management as of the end of 2019, with the bulk held in index funds and exchange-traded funds.

“Investors are looking to build resilience into their portfolios and ballast against equity market shocks by increasing their allocations to less correlated exposures in private markets,” Edwin Conway, global head of BlackRock Alternative Investors, said in a statement. “Investor demand for this fundraise reinforces our belief that infrastructure will play an increasingly important role in portfolio construction moving forward.”

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The Global Energy & Power Infrastructure Fund III will target investments in “high-quality and essential energy infrastructure businesses and assets” across industry sub-sectors including electric power, energy transportation and storage, and utilities, according to the statement. The fund will exclude coal-generated power, investing instead in electric power generated from renewable energy sources and natural gas.

More than 50 institutional investors committed to the fund, including public and private pension funds, sovereign wealth funds, foundations, insurers, and non-profits in the U.S., Europe, Asia, and the Middle East. Investors include the New York City Employees’ Retirement System and New Mexico State Investment Council.

BlackRock previously announced in July 2018 that it had raised $1.5 billion in the infrastructure fund’s first close.

“The success of the fundraise reflects the search for diversified returns in a yield-starved environment, which continues to be front of mind for investors,” Mark Florian, head of BlackRock Real Assets’ global energy and power infrastructure team, said in a statement.

BlackRock Real Assets managed over $50 billion in real estate and infrastructure assets as of the end of last year.