BlackRock Considers Cornerstone Investments in IPOs

BlackRock has shown interest in cornerstone investing in IPOs in the Middle East as the world’s biggest asset manager pushes ahead in its drive to increase its presence in the region.

Ben Powell, Chief Middle East & APAC Investment Strategist for BlackRock Investment Institute (BII), spoke with correspondents on the sidelines of Abu Dhabi Finance Week, which is being hosted in the UAE capital this week.

He said, “We already have a number of emerging market funds which would have the ability to take part in IPOs in the region, and I think our investment appetite is global.” 

BlackRock push for AI investments

Although Powell declined to delve into specifics, he stated that BlackRock’s 2025 outlook calls for a push for investments in artificial intelligence (AI) and infrastructure development, which he hinted were sectors that would draw interest for further investments in the region.

“I would say broadly we are pro-risk. We are still quite constructive in aggregate, and then more specifically, we are on board with the artificial intelligence ‘mega force’, as we call it, and we will be focusing our investment attention specifically on those parts of the economy required to build out the artificial intelligence boom,” he explained.

The increased focus on AI is evident through BlackRock’s large-scale investments, including a partnership with Microsoft in September to launch a $30-billion fund to invest in AI infrastructure such as data centres and energy projects. MGX, an Abu Dhabi–backed investment company, is also a general partner in the fund, while AI chip firm Nvidia will provide expertise.

The companies said the partnership is expected to also mobilise up to $100 billion in total investment potential when including debt financing.

“We will continue to be positive on artificial intelligence but a bit more nuanced, by focusing on the build-out, which is going to be necessary to help more individuals or companies drive productivity gains. That is where the money is currently flowing, into that physical build-out of AI architecture and related energy and other ecosystems, which will be a mainstream asset class over the next few years,” Powell said.

Middle East growth

With $11.48 trillion in assets under management (AUM), BlackRock received approval from Saudi Arabia to set up its regional headquarters in Riyadh, last year, following the launch of an investment platform in Riyadh with the help of a $5 billion anchor investment from the PIF.

Last month, BlackRock also received a commercial licence to operate in Abu Dhabi, which Powell said would drive the asset manager’s growth plan into the next decade.

“The UAE, with its tremendous amounts of energy, natural resources and a positive regulatory approach has made it very attractive for market leaders in this space … Saudi has a similar story, which we think is going to be more driven by the private market. In fact, the kingdom’s capital markets are going to play an increasingly important part of Saudi’s growth story,” Powell said.

“Capital markets absolutely can be a funding vehicle for the growth of an economy. So, I think for Saudi, and maybe for the UAE, over time, we are going to see a little bit more diversification in funding sources, which should provide more resilience, which will allow capital market participants like BlackRock to be a part of their growth.”