Black Rock Sees 2024 Growth in Private Markets

The global transition to a low-carbon future is not only a necessity for environmental sustainability but also a catalyst for a myriad of private market investment opportunities.

BlackRock's 2024 outlook underscores the transformative impact of sustainability as a driving force shaping deals and fostering outsized growth across various sectors such as infrastructure, real estate, private debt, and private equity.

Investment Potential in Restructuring Energy Infrastructure

BlackRock estimates that the restructuring of the world's energy infrastructure could lead to an average annual investment of $4 trillion in renewable energy through 2050, nearly doubling current spending. This substantial investment potential spans clean power generation, storage solutions, electric vehicle infrastructure, alternative fuels, and more.

>> Read more about BlackRock's infrastructure bet

Infrastructure emerges as a standout player in this transition, offering inflation-linked, long-duration contracts that provide stability amid market volatility. Real assets, including real estate, also reap benefits from the sustainability transition, particularly through investments in green buildings.

In the realm of private debt and equity, the low-carbon shift is expected to create dispersion among firms based on carbon profiles, energy usage, and adaptability. Outperformers are likely to be companies leading in emissions reductions and clean technology, presenting lucrative opportunities for investors.

However, this transition poses challenges to high-carbon sectors, necessitating a discerning approach from investors. BlackRock emphasizes that investors must have a keen understanding of the social, economic, and cultural trends in specific regions to pinpoint opportunities effectively.

Occidental and BlackRock's Joint Venture: STRATOS

Occidental and BlackRock have formed a joint venture to develop STRATOS, the world's largest Direct Air Capture (DAC) plant. This $550 million investment by BlackRock signifies a significant commitment to advancing sustainable technology.

STRATOS, designed to capture 500,000 tonnes of CO2 per year, represents a cutting-edge decarbonization technology. The construction, expected to be commercially operational in mid-2025, is already 30 percent complete, employing over 1,000 people during the construction phase and supporting 75 jobs once operational.

Edwin Conway, Global Head of Private Equity Markets at BlackRock, emphasizes, "We expect private markets will remain an attractive option for investors to deploy capital in 2024 and beyond." The sustainability mega-trend underpins this positive outlook, driving deal flow and reinforcing the role of private markets in supporting the transition to a low-carbon economy.

Strategic Role of American Energy Companies

This joint venture underscores the critical role of American energy companies, with Larry Fink, Chairman and CEO of BlackRock, highlighting Occidental's technical expertise in bringing unprecedented scale to this decarbonization technology. STRATOS, beyond being an investment opportunity for BlackRock's clients, is positioned to provide cost-effective solutions for hard-to-decarbonize industries, aligning with the goals of major companies like Amazon, Airbus, and TD Bank Group in reducing emissions.

Low-carbon is Shaping the Future Investment Landscape

In conclusion, the low-carbon economy is not merely a futuristic concept but a dynamic force shaping the present and future landscape of private market investments. BlackRock's strategic outlook and its substantial investment in STRATOS exemplify the pivotal role of private markets in driving sustainable solutions and influencing the trajectory of the global economy towards a more environmentally conscious future.