BlackRock in talks to acquire IGIS Private Equity for ESG investment

IGIS Asset Management confirmed Monday that negotiations are underway with BlackRock, the world’s largest asset manager, to acquire IGIS Private Equity (IGIS PE), which specializes in investments in eco-friendly infrastructure.

BlackRock, which has $8.6 trillion in assets under management as of the end of last year, spearheaded the trend of environmental, social and corporate governance (ESG) investments worldwide. CEO Larry Fink even sent a letter last year urging the heads of BlackRock’s portfolio firms to pursue ESG management.

“It is true that BlackRock seeks to take over IGIS PE,” an IGIS Asset Management spokesman told The Korea Times. “It is difficult for us to disclose more specifics at this moment, such as the amount of shares to be sold or their price.”

BlackRock’s Seoul office declined to verify the deal, saying the U.S. asset management firm’s Korean subsidiary is not involved in the negotiations.

IGIS Asset Management holds a 49 percent stake in IGIS PE. The remaining 51 percent is owned by Taeryeo Construction Industry and other shareholders.

Founded in 2018 for IGIS Asset Management’s business diversification, IGIS PE has been led by former Macquarie Capital Korea executives who have expertise in investments in waste disposal and new renewable energy facilities.

In 2019, IGIS PE established Korea Renewable Energy Development and Operation (KREDO) for its own power generation business and announced it would create a 200 billion won ($174 million) fund with Korea Electric Power Industrial Development to invest in solar power businesses and energy storage systems. Last year, it signed a contract with SM E&C for a 1.6-gigawatt offshore wind project in Sinan, South Jeolla Province.

According to industry sources, the series of eco-friendly businesses have drawn attention from BlackRock that has sought increased investments in environmental infrastructure projects in the Asian market. The investments prioritize ESG principles.

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In a message delivered Sunday to the G20 finance ministers at the Venice International Conference on Climate, the BlackRock CEO urged the World Bank and the International Monetary Fund (IMF) to consider private capital in pursuing eco-friendly projects around the world.

“There is private capital that can be mobilized for the emerging markets, but we need to rethink the way the international financial institutions can support low-carbon investments at scale,” he said.

Once it finishes acquiring IGIS PE, BlackRock is expected to use part of its $4.8 billion Global Renewable Power Fund III for its eco-friendly investments here. Korea Transportation Asset Management invested 200 billion won in the fund with the money it raised from five domestic institutions. BlackRock plans to use the fund for investments in wind and solar power projects around the world.

BlackRock is also trying to raise $500 million for its Climate Finance Partnership Fund to be used for eco-friendly power generation projects in emerging markets. Last week, the company announced it secured more than $250 million for the fund in commitments from a consortium of global institutional investors, governments and philanthropies.

The U.S. firm has indicated it will continue to enlarge its alternative investments in Korea by restructuring its local businesses.

“Investors’ search for yield and increased portfolio diversification for overseas exposures have helped advance our Korea business remarkably in recent years, especially for alternatives and index strategies,” BlackRock’s Asia head Susan Chan said in March, when the company sold its onshore retail fund business to DGB Asset Management.

Source: Korean Times