GIP Integration into Blackrock
Any updates on how this has been going so far? Have LPs generally viewed positively? Any news on what will happen with BLKs existing infra funds? etc…
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Integration has been going poorly to say the least. Heads are rolling and morale is lower than anyone could have ever thought. All of the GIP Associates and Analysts are looking for new roles because the chopping block seems to be randomized at this point. Not sure how it’s going from the BLK perspective since we haven’t really interacted with them…
Senior heads or junior heads? And for what reason?
Juniors, Asso and below. Rationale is unclear but there have been some surprises.
Do you have any thoughts on how this might affect their current incoming class of Analysts?
I work on the BLK side. Would say that some things have changed, but overall not much integration has actually happened. The only real difference is that Bayo, Raj, and McGhee are on our IC now and so there's been a bit of an adjustment in terms of trying to draft memos in the style that they want to see / bring deals that we think they'll want to do. There's a ton of speculation around integration plans long-term, but at least for the next vintage of our fund series, it kinda seems like status quo, but with new IC members. If there are going to be some radical changes though, I'd love for the GIP leadership team to just rip the bandaid off already... but basically just trying to be patient for now. I'm curious though, why is morale low on the GIP side? What's actually different from pre-acquisition?
The obvious difference is that they’re now working for Blackrock instead of GIP…? Very different position. Unless you made a load on your GP ownership (which per definition very few people did and probably only senior equity partners) it’s hard to see how that’s an attractive trade.
I understand the frustration from non-founding partners who maybe hoped they could buy into the GP over time similar to what they're doing at ISQ. But for mid-level investment professionals (associate to principal), the model is pretty similar to any other public alts manager (BX, KKR, APO, etc.) where I understand shareholders get a fixed percentage of the performance fee and the rest is allocated to the investment team based on seniority. FWIW, BlackRock's "legacy" infra fund series was also acquired by BlackRock from First Reserve and has operated pretty independently until now because it's being tucked under the GIP umbrella and will be marketed as GIP's middle market infra product going forward.
Bump
Integration has been non-existent at best. BLK employees sit in their own area and the GIP people are corralled off behind red ropes with GIP Principals openly talking about the BLK people as though they are lesser than. A number of GIP juniors have been fired with a ton of people looking for the door after bonuses (retention or otherwise) get paid out later this year/early next. The mass exodus will hopefully will be a wakeup call to Larry that he bought a HR nightmare (evidently 0 diligence was done here since settlements paid out before the deal closed).
Any reason the juniors were fired?
They over hired so they trimmed a lot of the prior year’s class
I’m an associate at GIP legacy with some college peers in BLK legacy. This is a merger that makes sense to greater Blackrock wanting to have a name in the private equity space in theory, but it’s really just GIP leadership holding the reins. Lots of random layoffs happening on both sides I’ve heard. It’s been a mess to integrate as the structure of sectors vs generalist programs is different and there is passive aggressive senior politics on all sides. I heard a BLK fund is out of capital but cannot fundraise. One BLK group apparently completely disappeared, but that may be due to fund performance. There isn’t an inviting welcome on both sides, everyone except the ones payed out seems to agree it’s a mess. There is also open desk seating on the new office space, which is very distracting and feel watched all the time
Which BLK fund ran out? Climate infra is a mess
smarter to eliminate blk groups than integrate them fully under the GIP platform. GIP folks think they are better and smarter than blackrock folks. They hold themselves to a higher prestige, and yk maybe rightfully so. One of the Blackrock funds has negative IRR and multiple bankruptcies with their head going through investigation. OG blackrock funds quite frankly dilutes GIP’s platform value.
Most of the BLK energy funds are trash. And so is the junior talent - so it’s not irrational for the GIP team to view themselves as smarter or better investors - it’s fundamentally true and by a wide margin
BLK bought GIP bc they knew their internal energy/infra team was weak (bottom quartile) and struggling in a big sector - and probably won’t ever generate performance fees.
Bumping this. Has culture improved at all? How is life as a SA/VP at the GIP legacy?
No, overall culture has not improved. I honesty think GIP leadership views a cutthroat junior culture as a necessary driver of performance excellence and as a differentiation factor from BLK teams — which they don’t view favorably. Honesty, the real winners of this merger are remaining BLK teams who get to claim associations with GIP on their linkedin profile, but they may be also holding their breathe and worrying about job security
GIP is almost a sovereign wealth fund at this point. Creates a god complex.
I think a lot of these previous comments are from associates on the GIP side who don't really know whats going on because GIP leadership barely shares anything with juniors. there are several different legacy funds with very different teams and track records. there has been a healthy nature is healing moment, but otherwise there are some definite positives to the integration. BLK brand name helps internationally with corp relationships as the largest shareholder in most companies and a household name and GIP also effectively acquired an infra solutions business, a venture energy transition fund JV with Temasek, a mid-cap infra fund series, and an IG infra debt business, which are all performing solidly. one of the larger funds, the climate team, had the larger layoffs due to their subpar performance. But from GIP's perspective they just became the thousand pound gorilla with all the resources and the same prestige and culture, so feels like a win
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