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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”.