I recently wrote about the de-listing of Malaysia Airports from the Malaysian stock exchange. It was taken over by a consortium of investors led by two government-linked investment vehicles: sovereign wealth fund Khazanah Nasional and employee savings fund EPF. One of the other big partners is an investment fund called Global Infrastructure Partners (GIP).
GIP is an American investment fund that specializes in infrastructure. As of 2024, it had around $100 billion in assets under management across a range of industries including energy, digital infrastructure, logistics, and transportation. Its portfolio was mainly concentrated in Europe and America.
There have been some big developments over the last year. At the end of 2024, American private equity giant BlackRock completed a $12.5 billion acquisition of GIP. Combined with BlackRock’s existing infrastructure portfolio, the deal brings their total infrastructure assets under management to more than $150 billion. We’ve also seen that since the deal was announced, GIP has made some interesting shifts in its investment strategy.
First, in March 2024, GIP announced it had raised over $2 billion with an inaugural emerging markets fund. The purpose of this fund is to invest in 11 markets in Asia and Latin America that display “favorable demographic, economic, and regulatory conditions coupled with a rapidly growing demand for private infrastructure investments.” The press release does not specify what the 11 countries are.
We can make some educated guesses though. In June 2024, GIP announced that they would be joining a coalition focused on increasing investment (potentially as much as $25 billion over several years) into emerging markets that are members of the Indo-Pacific Economic Framework. This includes India, Indonesia, Malaysia, Thailand, and Vietnam. GIP is being joined in this effort by other private equity heavy hitters like KKR, as well as big sovereign wealth funds from the region like Temasek and GIC.
I don’t usually pay attention to press releases like this, because they tend to be drafted in such a vague way as to be meaningless. But GIP has wasted no time putting their money where their mouth is, pushing through the privatization of Malaysia Airports in partnership with Khazanah and EPF and in the process becoming a major shareholder in Malaysia’s entire national airport network. The deal was valued at around $4 billion.
The pivot to Indo-Pacific infrastructure took an even bigger turn when it was announced in the last few days that a consortium including GIP and BlackRock were acquiring Hong Kong-based port operator Hutchinson Port Holdings for almost $23 billion. If not blocked by regulators, this deal will see the BlackRock-led group acquire total or partial ownership of 43 ports in 23 countries including Indonesia, Malaysia and South Korea, as well as along the Panama Canal. Hutchinson operates ports in China and Hong Kong which will not be part of the deal.
It’s difficult not to interpret this blockbuster deal through a geopolitical lens. It’s clear at this point that China has been quicker on the draw than the United States in investing in critical infrastructure in regions like Southeast Asia. They’ve built or are building high-speed rail projects in Thailand and Indonesia, and have been willing to integrate countries in the region into clean energy value chains, investing in local production of things like batteries, EVs, solar panels and nickel.
By comparison, American companies like Tesla have been slow to enter the Southeast Asian market and there’s been little indication Elon Musk wants to set up any significant manufacturing in the region. Meanwhile, Apple had to be browbeaten into making a modest amount of investment in exchange for being allowed to sell the latest iPhone in Indonesia. The obvious take-away is that the U.S. has little power to compel private companies like Apple or Tesla to expand their footprint in a region like Southeast Asia if they don’t want to, even if doing so might be beneficial to U.S. geopolitical interests.
Which is why it’s interesting that we are suddenly seeing a flurry of private equity activity being funneled into critical infrastructure in and around Southeast Asia (and other parts of the world that have potential geostrategic value). Two years ago, GIP had fairly limited exposure in the Asia-Pacific region, especially Southeast Asia.
Within the last year, the fund has become a major shareholder in Malaysia’s national airport network, and in one of Indonesia’s largest container terminals (assuming the Hutchinson deal goes through). And they seem keen on pursuing more opportunities in the region, especially related to digital infrastructure and data centers.
Are these decisions being made purely on the basis of their commercial considerations, and the returns that BlackRock and GIP expect to generate by investing in energy, transportation and digital connectivity in a fast-growing region with ballooning demand for infrastructure? Or are there broader geopolitical considerations behind this pivot to the Indo-Pacific? I don’t know the answer. But it certainly seems like something worth keeping an eye on.