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BlackRock's $12.5 billion acquisition of Global Infrastructure Partners wins praise in analyst upgrade

By STeve Gelsi

Asset manager's deal for private-equity firm will help it tap 'democratization' of alternative for individual investors

BlackRock Inc.'s plan to buy major private-equity firm Global Infrastructure Partners for $12.5 billion will help the asset-management giant's stock reach the $1,000 mark, TD Cowen analyst Bill Katz said in a fresh upgrade of the stock.

Katz said Tuesday he sees a "pathway toward $1,000" for BlackRock's (BLK) stock price as he upgraded the fund manager to outperform from market perform and raised its 12-month price target to $938 a share from $819 a share.

The upgrade comes just a few days after BlackRock announced plans to pay $3 billion in cash and about 12 million shares for Global Infrastructure Partners.

"GIP adds flow/margin/fee rate building blocks, with greater confidence [BlackRock] can increasingly tap into retail alternatives democratization," Katz said, referring to efforts by private-equity firms to grow by making their investments more accessible to individuals, rather than just institutions.

Also read: Why wealthy investors put $125 billion into this new type of private-equity fund last year

Like TPG Inc.'s (TPG) deal to buy private-equity firm Angelo Gordon in 2023, the GIP acquisition "alters the narrative on [BlackRock] ... shifting investor focus onto multi-vectored growth post combination while providing short term/long term valuation support," Katz said.

Investors may also be more comfortable about BlackRock's legacy asset-management platform, Katz said, together with the firm's stronger-than-expected fourth-quarter results on Friday,

Katz said private-equity giant Blackstone Inc. (BX) may be a better comparable stock to BlackRock Rock than fellow asset manager T. Rowe Price Group Inc. (TROW) once the GIP deal closes as expected in the third quarter.

BlackRock's stock is up about 41% in the past year, while T. Rowe's stock has fallen 10.4% over the same period. BlackRock's stock has risen 3.5% in the past year.

Global Infrastructure Partners manages about $100 billion and is led by Bayo Ogunlesi, who is also lead director of Goldman Sachs Group Inc. (GS).

Also read: Private equity: Everything you always wanted to know about this $12 trillion asset class but were afraid to ask

Also read: 'They have shattered barriers': On Wall Street, the new biggest private equity firms are run by Black and Latino billionaires, and people of color

-STeve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.


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01-17-24 0956ET

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