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How Adebayo Ogunlesi’s contrarian bet led to $12.5bn BlackRock tie-up

Global Infrastructure Partners co-founder steps into the limelight with ‘transformational’ deal

Adebayo Ogunlesi, co-founder of Global Infrastructure Partners, credits his wife Amelia for a career switch that led on Friday to a $12.5bn deal and a leadership position at BlackRock, the world’s largest money manager.

In 2005, Ogunlesi, then a top banker at Credit Suisse, was summoned to Omaha, Nebraska, by the energy arm of Warren Buffett’s Berkshire Hathaway to study a large takeover. It was the kind of call most financiers dream of, but Ogunlesi complained to his wife: “I really don’t want to go.”

In an interview with the Financial Times, he said his wife offered an ultimatum: “Either you decide you like your job and you want to keep doing it. Or, if you decide you don’t, go find something else. But please don’t think you can spend the next five years moaning.”

After that “kick in the behind”, Ogunlesi quit banking and at the age of 52, decided to try his hand as an investor.

Ogunlesi and a handful of colleagues, mostly from Credit Suisse, considered private equity, then near the apex of a pre-financial-crisis takeover bubble. But they opted for a contrarian bet, raising a fund to invest in the niche sector where he had done his first deal in 1983: the financing and operating of airports, energy plants and other crucial infrastructure. 

“We picked infrastructure because that was an area where there was very little competition,” said Ogunlesi, now 70.

In just 17 years, GIP quietly amassed $105bn in assets and pioneered a booming $1tn sector that is one of the fastest growth segments of money management. BlackRock chief executive Larry Fink said Friday’s deal was “transformational” for the larger group’s ambitions in private markets.

The tie-up will put Ogunlesi on BlackRock’s board and global executive committee, pushing the publicity-shy Nigerian-born financier into the spotlight. It also cements his status as one of Wall Street’s wealthiest and most powerful figures. He and his GIP colleagues will collectively become the second largest shareholders of BlackRock, a nearly $120bn company.

“In the early days, people underestimated ‘Bayo’,” said Kenneth Chenault, former CEO of American Express, and a close friend of Ogunlesi since both were at Harvard Law School. “He was flying under the radar and then people woke up one day and saw [GIP] was a $50bn fund . . . What he has done is amazing and historic.”

Raised in Lagos by a father who was the first Nigerian professor of medicine and a mother who ran a nursery school, Ogunlesi earned a first class degree at Oxford university, and law and business degrees from Harvard.

Ogunlesi then won a prestigious Supreme Court clerkship working for Thurgood Marshall, the first black justice: “It was one of the best jobs I’ve ever had,” he said. The justice provided a model that still influences him today. 

“When you watch somebody who’s a giant or an icon and see that he conducts himself as a normal person, you cannot help but learn from that,” said Ogunlesi. “Be serious in what you do but don’t take yourself too seriously. When you become pompous, nobody wants to be around you.”

He moved to New York to work at the Cravath law firm but quickly jumped to First Boston, later bought by Credit Suisse, to work on a Nigerian gas project. Six months in, the deal died when Nigeria experienced a coup and Ogunlesi’s client nearly went to jail. “I learned very early on that there is a lot of political risk associated with infrastructure projects,” he said.

At Credit Suisse, Ogunlesi forged the connections that later helped GIP succeed. He ruffled feathers with a brutal early 2000s restructuring of the investment bank, and later became chief client officer. When Ogunlesi and his co-founders struck out on their own to launch GIP in 2006, Credit Suisse’s then-CEO Oswald Grübel backed them with $1bn of the bank’s money. A meeting with Jeff Immelt led to $500mn more from General Electric.

Building a business let Ogunlesi implement another of Marshall’s principles: “If you can find people who are smarter than you, surround yourself with them and consider your job as a leader to be clearing obstacles out of their way and inspiring them to do the best that they possibly can.”

The first years were not easy. A $600mn equity investment in UK waste management company Biffa in early 2008 proved disastrous. Fallout from the global financial crisis drove down activity at its customers such as restaurants and construction sites, and it lost business to fly-by-night competitors. Telling investors in 2012 that the stake’s value had dropped to $93mn was “the most mortifying moment in my career as CEO,” Ogunlesi said. “The moral of the story is: avoid businesses where there are no barriers to entry.”

Failed infrastructure investments are particularly painful, because margins are thinner than in traditional corporate buyouts. “You cannot afford to have an investment that turns out to be a zero,” Ogunlesi said. 

GIP was one of the first private fund specialists to hire a powerful chief risk officer, and was an early advocate of operational improvements to boost the value of infrastructure assets. Its first investment, a 2006 stake in London City airport, sold a decade later for four times the original purchase.

At London Gatwick airport, GIP introduced oversized luggage trays and other innovations that cut security screening times by more than half, freeing passengers to spend more in restaurants and shops where GIP received a concession.

“The thing about infrastructure businesses is a lot of them are monopolies and monopolies tend not to focus on customer service,” Ogunlesi said. “There are things you can do to generate improvements in operational efficiency and customer service and, obviously, revenues.”

GIP’s sprawling portfolio also includes Sydney and Edinburgh airports, the port of Melbourne, critical US pipelines, CyrusOne data centres and Italo high-speed rail. Its companies have combined annual revenues of $75bn and 115,000 employees.

The BlackRock deal aims to open the door to even larger investments by leveraging the heft of a $10tn asset management goliath that is a top shareholder of most global companies.

“This is not about cashing out,” Ogunlesi said. “It is about the opportunity we have as part of BlackRock to build what is without question the premier infrastructure investing business. That’s the mission I’m on.”  

Most of the $12.5bn price tag will be paid in BlackRock shares, and 40 per cent will not vest for five years. Ogunlesi and GIP president Raj Rao will lead a division that combines GIP with BlackRock’s $50bn infrastructure business.

Though Ogunlesi will have his first boss in 18 years, he said Fink, a friend since both worked at First Boston, has downplayed the potential for conflict: “Larry said to me: ‘You will be on the board of directors, you will be my boss’. I think we have mutually assured destruction.”

Joining BlackRock will immediately increase Ogunlesi’s public profile, something he has resisted while serving on the boards of Goldman Sachs, the Lincoln Center and two hospitals. A pragmatist, he golfed with George W Bush and served with Fink on Donald Trump’s economic advisory council. But he also chairs Joe Biden’s infrastructure advisory council and most of his $220,000 in political donations went to Democrats.

Asked why he has remained so private, the father of two laughed. “I don’t need to read about myself,” he said. “I know enough about myself and who I am.”

Friends say that Ogunlesi, a passionate cricket and Tottenham Hotspur fan, makes time for them at critical moments. When Ken Frazier, another law school friend, was CEO of Merck and facing criticism for refusing to cut research budgets, Ogunlesi reassured him he was doing the right thing. Last summer, Frazier’s daughter fell ill in California while both men were at a wedding in Italy, so Ogunlesi volunteered his private plane.

Ogunlesi, a director of Topgolf Callaway Brands, said that he had become an “atrocious golfer” since knee surgery. But Chenault, who plays regularly with him, said this self-deprecation minimises his “competitive fire”.

“He is not a ‘master of the universe’ persona, but at the same time, don’t try to fool Bayo. He will shred you to pieces,” Chenault said.

Kyiv’s initiative attracts more security officials from non-western states but China declines to attend

Security officials from 83 countries gathered in Davos on Sunday to discuss Ukraine’s demands for ending the war with Russia, in talks marked by rising non-western participation but limited progress towards peace.

Held on the eve of the World Economic Forum in the Swiss mountain resort, the meeting was the fourth called by Kyiv to promote its peace proposals, which include the full withdrawal of Russian troops from its territory. It took place as the war, which appears stuck in a grinding deadlock, nears the second anniversary of President Vladimir Putin’s full invasion.

The active participation of national security representatives from India, Brazil and Saudi Arabia, countries from the so-called Global South who maintain diplomatic relations with Russia, was hailed as a positive signal by western officials.

Andriy Yermak, chief of staff to Ukrainian President Volodymyr Zelenskyy, told reporters after the meeting that “open and very constructive talks” had been held between “countries who want to be on the side . . . of peace.”

But the decision by China, Moscow’s most important ally, not to attend, undermined its importance, they added. Russia itself was not invited.

“The participation of the Brics alliance is very important because these countries have a relationship to Russia,” said Swiss foreign minister Ignazio Cassis, who is co-hosting the talks.

“China plays a significant role. We must find ways to work with China on this,” he added, in remarks to reporters partway through the talks.

Zelenskyy was not present at the talks but will speak at the World Economic Forum event in Davos on Tuesday, and is expected to hold bilateral meetings with other leaders then.

Yermak, when asked if Zelenskyy would meet Chinese prime minister Li Qiang, said: “Let’s see.”

The 83 delegations, including 18 from Asia and 12 from Africa, is significantly larger than the 65 that attended the last round of talks in Malta in October. That followed an initial meeting in Copenhagen and a follow-up in Jeddah.

One person briefed on the discussions said they involved “open dialogue, with some of the contradictions being addressed head on”.

Officials said some non-western states reiterated their position that Russia should be involved and that a settlement should address Moscow’s security concerns, such as Ukraine’s desire to join the Nato military alliance.

In response, the western nations who have backed Ukraine with weapons and financial support contended that developing nations with ties to Russia should use their influence to make clear to Moscow that its invasion is in breach of the UN charter and undermines global security.

“Of course, we have different thoughts on how it is possible to [achieve peace],” Yermak said of the various positions. “Some think that it is necessary to immediately sit at the table [with Russia].”

But all delegations were “very united on the main principles on which is based international law and the statute of the United Nations,” he added.

Cassis said it was “illusory to think that Russia would respond positively” to any invitation to talks, adding that Moscow was “not ready to take any step or make any concession”.

The Swiss luxury conglomerate reports quarterly results this week, as the failed deal to offload its struggling e-commerce unit to Farfetch looms large. That, plus what else to watch for in the coming days.

With Farfetch rescued by Coupang and Matches by Frasers Group, the final loose thread from December’s luxury e-commerce drama is the fate of Yoox Net-a-Porter. Parent company Richemont has said very little about what it will do with its loss-making unit. Speculation ranges from a sale to a spinoff to shutting the whole thing down; perhaps Richemont will surprise us all and decide to keep the thing. That’s unlikely, but so was Farfetch getting saved from bankruptcy at the last minute by a Korean e-commerce giant that’s currently touting a sale on sweet potatoes on its homepage.

Richemont reports quarterly results on Thursday, and will have to give some sort of update. While it’s possible that message will be “stay tuned,” the company has made no secret of wanting YNAP off its books ASAP.

All that aside, the results themselves are likely to make some waves. Richemont will be the third major luxury company to report this year, and by far the biggest. What it says will help clear up some confusing signals: last week, Brunello Cucinelli demonstrated that the (quiet) luxury boom was still going strong with fourth-quarter revenue up a better-than-expected 24 percent last year. However, on Friday Burberry issued its second profit warning in three months, reflecting softening luxury demand.

Richemont is likely to fall somewhere in between. The group’s focus on high-end jewellery is, for now at least, making it more resilient than brands reliant on convincing aspirational consumers to buy entry level handbags. Last quarter, the company reported sales growth, though it noted customers were getting pickier about where they shopped. In other words, whether Richemont can continue to rise above the slowdown depends on the strength of its brands.

When, in the closing weeks of 1783, Pitt the Younger became Great Britain’s youngest ever prime minister at the tender age of 24 — a record he retains in today’s UK — his government had a poor prognosis. It was dubbed “the mince pie administration” on the assumption it would not last much beyond the Christmas period, while satirists mocked the “infant Atlas”. Was the nation safe with “a kingdom trusted to a schoolboy’s care”?

But Gabriel Attal, the fresh-faced 34-year-old appointed last week as French PM, should be encouraged by Pitt’s example: before his untimely death, the Georgian premier went on to a successful near 20-year, two-term career in the top job and still makes the lists of great political leaders.

Attal has not yet reached the dizzy heights of command: as number two to the French president, his mentor, he has been described as “baby Macron”. Speculation is rife on whether the choice of a loyalist, subordinate in age (Élisabeth Borne, 62, female, and therefore never a Macron mini-me, resigned after less than two years), will end like Caesar’s sponsorship of Brutus: is it a chance for the protégé to overtake or even betray the older man?

The promotion of Attal looks like a sign that Emmanuel Macron is banking on the French electorate having stereotypical assumptions about age and energy levels. The president, himself only 46, was the youngest ever to be elected in France in 2017, at 39. But these days his administration badly needs an injection of oomph.

However, do such Operation Young Bloods ever really deliver? “In presentational terms youth can be an advantage,” according to Steven Fielding, emeritus professor of political history at Nottingham university. For an incoming administration or a hopeful challenger “it highlights the vigour you’re going to bring to change”.

But, Fielding adds, it won’t work “at the end of a long spell of your party in power”. It’s a salutary warning not just to the French government but two of the UK’s incumbent parties, Conservative and Scottish Nationalist.

Both Tony Blair and John F Kennedy won power at the age of 43: Blair talked up a “young country”; JFK was the symbol of an optimistic future after two terms of Eisenhower, by then 70. David Cameron was also 43 when he became UK prime minister — no Pitt, but his smooth visage proved a useful, upbeat contrast during the 2010 election with Gordon Brown’s careworn features, with 13 years of Labour in power etched on them.

In recent months, Tory strategists casting around for attack lines to use against the opposition leader Sir Keir Starmer have had a go at his age — the Labour challenger is 61 to Sunak’s 43, the magic moment for Blair, Cameron and JFK. But it smacked of desperation; the attempt to portray Sunak as the change candidate has since been dropped.

As for the SNP, 38-year-old Humza Yousaf’s hopes of offering a fresh start after taking over from Nicola Sturgeon as Scotland’s first minister in March last year seem dashed: the party, which has been the largest in the Scottish parliament since 2007, is embroiled in scandals and down in the polls.

Steve Richards, author of several books on Britain’s political leaders, disputes the idea of 43 as a modern ideal: it’s good for establishing an aura of energy, he admits, but never having been part of a previous government proved a problem for both Blair and Cameron — “better for them to have been 10 years older with experience of government”.

The ill health that plagued Labour’s postwar administrations showed the danger of being too old, Richards adds, while Margaret Thatcher was lucky to be elected at 53: “A good age: previous ministerial experience, but fit and energetic . . . too energetic!”

The glaring exception among western democracies to this preoccupation with youthful vitality, is, of course, today’s US. America’s constitution demonstrates an opposite concern, blocking anyone under 35 from becoming president. This year’s White House contest is likely to be the battle of the gerontocrats, pitting incumbent Joe Biden, now 81, against Donald Trump, 77. Both broke the upper age record when inaugurated the first time around. Observers are struggling to use even the deadly, backhanded compliment “sprightly” about either of them with any conviction.

It is “a sight to make surrounding nations stare” as the satire on Pitt’s premiership put it, but for the opposite reason. Perhaps the US should encourage Biden and Trump to look for some Macron-style mini-me protégés. Or perhaps in the latter case, we should pray they do not.