Rock to stone. Larry Fink faces two existential questions: one, when he will step down from leading $120 billion asset manager BlackRock; and two, what the firm’s future will be. On Friday, he got a half-step closer to settling both with the $12.5 billion purchase of Global Infrastructure Partners. The deal is sensible, and transformational enough to give Fink optionality on retirement – if only he were less ambitious.

Taking BlackRock, best known for its giant index fund business, deeper into private markets makes sense. So-called illiquid alternatives, like infrastructure and real estate, accounted for 1% of the firm’s $10 trillion in assets in the fourth quarter of 2023 but nearly 9% of revenue. And GIP’s focus on the likes of renewable energy or data centers is in a sweet spot: Global interest rates are high enough that leveraged buyouts look risky, but low enough that finding yield is still difficult. Hard infrastructure assets, juiced with a moderate amount of debt, offer a tempting risk-return profile in between LBOs and traditional stocks and bonds.

BlackRock has an edge, too. Its financial markets advisory group, which is helping Ukraine build a recovery fund, has relationships with governments in need of investment. And BlackRock is a shareholder in nearly every publicly traded company. Partnerships with Occidental Petroleum and AT&T offer a map for how Fink and GIP’s founder Bayo Ogunlesi, both hailing from investment bank First Boston, can use their combined $150 billion war chest to take on established practices at Brookfield Asset Management and Macquarie. And the price looks reasonable. At upward of 25 times the target’s earnings from fees, it’s in the ballpark of analyst targets on alternatives firms like Fink’s former employer Blackstone.

The trouble for Fink is that the deal isn’t totally transformative. It’s about as big as the 2009 purchase of Barclays Global Investors, the genesis of BlackRock’s now-company-defining iShares funds. But BGI accounted for about half of the buyer’s market capitalization 15 years ago. GIP punches in at roughly a tenth. The deal also makes the business look more like Blackstone, which doesn’t exactly make it stand out.

A simultaneous organizational restructuring shows Fink is thinking bigger. BlackRock is reshaping its exchange-traded fund business, integrating it with other assets at the firm under the charge of Stephen Cohen. The idea is to become a one-stop-shop for investors – whether it’s passive, active, private, public, stocks, or bonds. To extricate clients from a siloed mentality, BlackRock will have to integrate technological platforms, too. Fink can either leave that to the next leader, or stay on and roll up his sleeves.

Larry Fink faces two existential questions: one, when he will step down from leading $120 billion asset manager BlackRock; and two, what the firm’s future will be. On Friday, he got a half-step closer to settling both with the $12.5 billion purchase of Global Infrastructure Partners. The deal is sensible, and transformational enough to give Fink optionality on retirement – if only he were less ambitious.

Taking BlackRock, best known for its giant index fund business, deeper into private markets makes sense. So-called illiquid alternatives, like infrastructure and real estate, accounted for 1% of the firm’s $10 trillion in assets in the fourth quarter of 2023 but nearly 9% of revenue. And GIP’s focus on the likes of renewable energy or data centers is in a sweet spot: Global interest rates are high enough that leveraged buyouts look risky, but low enough that finding yield is still difficult. Hard infrastructure assets, juiced with a moderate amount of debt, offer a tempting risk-return profile in between LBOs and traditional stocks and bonds.

BlackRock has an edge, too. Its financial markets advisory group, which is helping Ukraine build a recovery fund, has relationships with governments in need of investment. And BlackRock is a shareholder in nearly every publicly traded company. Partnerships with Occidental Petroleum and AT&T offer a map for how Fink and GIP’s founder Bayo Ogunlesi, both hailing from investment bank First Boston, can use their combined $150 billion war chest to take on established practices at Brookfield Asset Management and Macquarie. And the price looks reasonable. At upward of 25 times the target’s earnings from fees, it’s in the ballpark of analyst targets on alternatives firms like Fink’s former employer Blackstone.

The trouble for Fink is that the deal isn’t totally transformative. It’s about as big as the 2009 purchase of Barclays Global Investors, the genesis of BlackRock’s now-company-defining iShares funds. But BGI accounted for about half of the buyer’s market capitalization 15 years ago. GIP punches in at roughly a tenth. The deal also makes the business look more like Blackstone, which doesn’t exactly make it stand out.

A simultaneous organizational restructuring shows Fink is thinking bigger. BlackRock is reshaping its exchange-traded fund business, integrating it with other assets at the firm under the charge of Stephen Cohen. The idea is to become a one-stop-shop for investors – whether it’s passive, active, private, public, stocks, or bonds. To extricate clients from a siloed mentality, BlackRock will have to integrate technological platforms, too. Fink can either leave that to the next leader, or stay on and roll up his sleeves.