In Duluth, Minnesota, a brewing storm over a $6.2 billion acquisition of a power utility by Global Infrastructure Partners (GIP) illustrates the complex interplay between local activism and major financial players. Local activists, backed by Washington-based groups, are mobilizing to scrutinize this deal, raising concerns about the implications of such a massive acquisition on community welfare. The stakes are high, and the potential fallout from this transaction could reverberate far beyond the shores of Lake Superior.
Interestingly, this local battle mirrors a similar uproar in Malaysia, where GIP’s involvement in the privatization of Malaysia Airports Holdings Bhd. has sparked fierce opposition, particularly due to the perceived political implications tied to its new owner, BlackRock Inc. As the world’s largest asset manager, BlackRock’s influence looms large, with $11.5 trillion in assets under management. Critics in Malaysia have expressed discomfort with CEO Larry Fink’s ties to Israel, while in the U.S., anxiety about BlackRock’s growing power is palpable.
BlackRock’s recent $12 billion acquisition of HPS Investment Partners has only intensified scrutiny. The firm now controls approximately $170 billion in infrastructure assets, positioning itself as a key player in financing public projects amid rising government debt levels. With federal lawmakers expressing concerns about the influence of large asset managers on consumer-serving utilities, the backdrop is set for a contentious debate about the future of public utilities and the role of private investment.
The Federal Energy Regulatory Commission (FERC) has already greenlit BlackRock’s bid for GIP, albeit with reservations. Commissioner Mark Christie highlighted the need for greater scrutiny of the influence wielded by large shareholders like BlackRock. This sentiment resonates with local residents who fear that a BlackRock-owned utility could lead to higher electricity bills and less accountability. As the firm expands its state-level government affairs teams, it is clear that BlackRock is gearing up for a battle on multiple fronts.
In Texas, the narrative shifts slightly. Republican lawmakers have spent years railing against BlackRock for its emphasis on Environmental, Social, and Governance (ESG) criteria. Yet, paradoxically, some have also sought Fink’s guidance to attract private investment to the state’s struggling electricity grid. This duality illustrates the complicated relationship between political power and financial might, as BlackRock finds itself both vilified and sought after in the same breath.
The GIP deal is BlackRock’s most significant move since acquiring the iShares index-fund business in 2009. The firm’s strategy is to delve into an array of infrastructure assets, from airports to sewage plants, promising to enhance its private assets portfolio. However, the pushback from consumer advocates is palpable. Organizations like Public Citizen and the Sierra Club are demanding rigorous inspections of the deal, raising alarms about the potential prioritization of profits over public interest.
Minnesota’s Attorney General, Keith Ellison, has echoed these concerns, questioning whether GIP’s ownership would impair the utility’s accountability to local consumers. The apprehension is not unfounded; with GIP and Canada Pension Plan Investment Board poised to acquire Allete Inc., the worry is that Minnesota Power, which serves 150,000 customers, could become just a blip on the radar of these vast investment portfolios.
As the dust settles on these developments, one thing is clear: the landscape of energy investment is shifting. The growing power of firms like BlackRock raises critical questions about who truly holds sway over the utilities that serve everyday Americans. The push for transparency and accountability in these transactions is paramount, as communities grapple with the reality of being at the mercy of global financial titans. The fight in Duluth is not just about a power utility; it’s a microcosm of a larger struggle over the future of public resources, local governance, and the very fabric of community life.
