Larry Fink
Chairman and Chief Executive Officer at BlackRock
Thank you, Martin. We'll leave plenty of time for your questions later on, but I wanted to describe how we evaluated bringing our firms together with GIP, why we think the timing is so opportune and how infrastructure private markets can be so beneficial to all our clients, employees and to you, our shareholders.
Infrastructure is $1 trillion market forecasted to be one of the fastest-growing segments of private markets in the years ahead. A number of long-term structural trends support an acceleration in infrastructure investments. These include increasingly growing global demand and upgrading digital infrastructure like fiber broadband, cell towers and data centers. Renewed investments and logistical hubs such as airports, railroads, shipping ports and supply chains are re-wired. And a movement towards increased energy independence in many parts of the world, supported by decarbonization infrastructure.
In the United States and around the world there is as a public need for greater investment in infrastructure. This growing needs creates significant investment opportunities for clients. The unprecedented need for new infrastructure coupled with the record-high government deficits, means that private capital will be needed like never before. That supply-demand imbalance creates compelling investment opportunities for our clients. At the same time, corporates are looking to engage partners in new projects or partially derisking existing ones. These dynamic software clients, especially those investing for retirement, the high coupon, inflation-protected, long-duration investments they need and we believe it will define the future of asset management for the next 20 years.
Our acquisition philosophy has always been about growth not about cost take-outs and/or consolidations. Consistently, these combinations have resulted in reaching heights that neither BlackRock nor emerged partners could ever reach on their own. I truly believe that this will be the case again with the integration of BlackRock Infrastructure and GIP. Transformational transactions have strengthened our firm, have strengthened our culture and bringing top talent, new skills and experience into our organization.
Our culture has evolved as we welcome new teams and colleagues to BlackRock. Today, it represents a blending of the best parts of the cultures that have come together over the years. What's made our acquisition so successful was our steadfast commitment to One BlackRock culture, totally connecting to our clients with one platform, shared goals, a common as Aladdin technology, and as a result, BlackRock is greater than the sum of any one part. And then that drives BlackRock's differentiating growth model.
Reaching this moment is quite personal and emotional for me. Our firms, BlackRock and GIP, have similar origin stories. We founded BlackRock on understanding investment risks and the factors and forces driving returns, initially in fixed income and then across the equity markets and then globally. We wanted to help long-term investors better manage the risk in their portfolios in a scaled way through technology. That is what drove our early investments in Aladdin and all the investments we made since to enhance our understanding of risk factors to deliver superior outcomes for our clients. GIP started with a similar focus in the infrastructure space, understanding operational risks and the factors and forces driving business efficiencies. Like BlackRock is focused on understanding risk in fixed income, GIP built an active approach to analyzing and addressing operational risks.
My partners and I had the privilege of pioneering the mortgage-backed securities market. Bayo and his GIP partners in my opinion pioneered moderate infrastructure investing in private markets. And many of the BlackRock and GIP founders grew up in the same firms early in their careers where we created common roots, some shared experiences, most of them good sometimes bad and close client relationships.
The integration of BlackRock's existing infrastructure platform with GIP will result in a market-leading comprehensive infrastructure business with truly differentiated origination and asset management capabilities. GIP will be highly complementary and has limited overlap by clients and investment programs to BlackRock's existing leading franchises. These include diversified infrastructure, infra debt, infra solutions, climate infrastructure and decarbonization partners. BlackRock has invested originally -- has invested organically and inorganically in growing our infrastructure platform, which has $50 billion in AUM, having tripled since our acquisition of First Reserve in 2017.
BlackRock has already demonstrated our access to some of the largest pools of capital in the world. We're winning deals like add-back pipeline transaction and being chosen to partner with sovereign wealth funds and governments and significant climate infrastructure strategy. We have the sourcing capabilities, but greater AUM scale will enable us to have more sizable positions. The planned combination of GIP with BlackRock will accelerate investment scale, enabling us to grow faster. BlackRock's deep relationships with clients, corporates, governments and sovereign wealth funds can accelerate investment opportunities.
GIP's all lending proprietary deal flow -- leading proprietary deal flow has been supported by investment sizes, relationships and strong track record, including a long history of successful JVs with large industrial partners, GIP's deals span the world and sectors. Their investments include Gatwick Airport, Edinburgh Airport and Sydney Airport and CyrusOne Data Center and the Port of Melbourne and several other major renewable platforms. Through the future combination of BlackRock and GIP we'll be able to connect our clients with bigger and better opportunities, while also accelerating growth, diversifying revenues and generating earnings for our shareholders.
Like Rob and I, Bayo and his partners are all founders. We're excited about the opportunity to have new partners and new colleagues. I'm proud that the consideration in this transaction consists of approximately 75% of BlackRock's stock. GIP's founders will become among the largest shareholders of BlackRock. And we plan to have Bayo join our Board of Directors post-closing of our transaction.
There is no question, spiritually or financially, about whether we are long-term partners. We have the same interest as significant shareholders alongside our broader shareholder base. Our One BlackRock culture has been central to our success over the last 35 years. And cultural alignment has been a core throughout our history of successful M&A. From our founding to today, our firm is purpose-driven, focused on clients, focused on risk management and powered by data and technology.
Bringing our two businesses together results in a influx of top senior private market talent to BlackRock. GIP's founders will lead our combined infrastructure platform with teams of talented investors and business builders. They bring with them a strong investment and performance culture and a commitment to working across One BlackRock. I'm confident we'll be looking back on today as another transformational moment in the BlackRock history in a similar way when we can look back at our acquisition of BGI, Merrill Lynch Investment Management and our early days building Aladdin.
Our ability to adapt and to evolve and to grow has generated a total return of 9,000% for our shareholders since our IPO in 1999. That is well in excess of our S&P return of 490% and representative of the business model serving all our stakeholders. I truly believe we're better positioned than ever before in our history. And I'm very optimistic on the coming years ahead and the opportunities ahead for all of us.
BlackRock was built on optimism. When we founded BlackRock, we knew clients would be at the center of everything we do. We had a deep conviction in the long-term growth and the importance of the capital markets. In principle and practice, those beliefs remain core to BlackRock today. We are more connected to our clients than ever. Thousands of clients on behalf of millions of individuals around the world have entrusted BlackRock with $1.9 trillion of net new business over the last five years. Thousands more use our technology to support the growth and commercial agility of their own business. Years of organic growth alongside a long-term growth of the capital markets underpins our $10 trillion of client assets, which grew in 2023 by over $1.4 trillion.
In good times and bad times, whether investors are adding or reducing risk, our consistent industry-leading organic growth demonstrates that clients are consolidating more of their portfolios with BlackRock. In 2023, our clients awarded us with $289 billion of net new assets during this period of rapid change and significant portfolio derisking. BlackRock's differentiated business model has enabled us to continue to grow with our clients and maintain positive organic base fee growth.
We've grown regardless of the market backdrops and even as most of the industry has experienced outflows. I think back to 2016 and 2018 when uncertainty and cautious sentiment impacted investment behaviors among institutional and individuals. Many clients derisked and moved the cash. BlackRock stayed connected with our clients. We stayed rigorous in driving investment performance, innovating new products, technologies and providing advice on portfolio design. Once clients were ready to move more actively step back -- to stepping back into the market, they did it with BlackRock, leading to new record flows for client flows and organic base fee growth at or above our targets.
As we've seen before when investors were ready to put money back to work, they did it with BlackRock. Flows and organic base fee growth accelerated at the end of the year. We generated $96 billion in total net inflows in the fourth quarter and we entered 2024 with rate momentum. I've spent much of 2023 on the road, meeting with clients around the world and are planning to do the same thing in 2024, starting this month. Our partnership approach and the performance we deliver is resonating both in markets where we have a longstanding presence and those where our profile is just beginning and strengthening.
Companies and clients increasingly want to work with BlackRock. For companies where we are investors, they appreciate that we are a long-term consistent capital. We invest early as they invested through cycles, whether it's debt or equity, pre-IPO or post-IPO. Companies recognize the uniqueness of our global relationships, our brand and our expertise across businesses, markets and industries. This makes us a very valuable partner and in turn enables us to be involved in their sourcing and in performance that we provide for our clients. For example, in November, our diversified infrastructure franchise invested $550 million in STRATOS, a commercially scaled direct air capture facility in Texas, which is expected to be the largest in the world upon completion.
Through our fund's joint venture partner, Occidental Petroleum, we are providing our clients with investment access through our bespoke [Phonetic] energy infrastructure project. This is just a latest example of our sourcing and execution on numerous distinctive deals for clients over the last 18 months. In the United States, we partnered with AT&T and Gigapower JV and invested in Jupiter Power. Beyond the U.S., examples include such investments of Brazeau in Brazil, FirstAir in South Korea, Akaysha Energy in Australia, Lake Turkana Wind Farm in Kenya, just to name a few.
Last month, we announced an innovative partnership with Alterra that we will see a $2 billion investment in the climate opportunity across BlackRock's private debt and infrastructure equity strategies. This is one of our largest-ever private markets mandates. It adds on to our very strong track record, investing in the transition, including in emerging markets and extend our over $100 billion transition investment platform.
BlackRock's global network of relationships, data, analytics and flexible adaptable capital means we could source unique deals for our clients and mobilize assets and accelerate innovation and economic growth. Our active investment insights, our expertise, our strong investment performance similarly differentiating BlackRock in the markets. We saw nearly $60 billion of active net inflows in 2023 compared to an industry outflows. Across our active franchise, BlackRock has delivered durable investment performance with 87% and 92% of fundamental equity and taxable fixed income AUM above benchmarks or peer medium for the past five year period.
In ETFs, BlackRock generated an industry-leading $186 billion of net inflows for 2023. Our long-term leadership of the ETF industry is another testament to our global platform and our deep connectivity with our clients. BlackRock is the most scaled, diversified ETF provider in the U.S. and globally. We are bringing the ETF benefits of liquidity, a price discovery and market efficiencies and access to investors around the world. Nearly half of the 2023 iShares net inflows were from ETFs listed internationally in local markets, led by our European iShares' net inflows of $70 billion. BlackRock has the number one share of the European ETF market where industry flows were up 70% in 2023. Catalyst trends that we saw in the U.S. years ago, like the growth of the fee-based advisory and model portfolios, are just beginning to take root in Europe.
BlackRock takes a client first approach to product innovation and we continue to develop products that are suited for the new investment regime. For example, we launched 19 active ETFs in 2023, leveraging the benefits of the ETF structure to help clients reach the outcomes they seek. Some of these strategies provide access to the insights of our active portfolio managers, such as Rick Rieder and Tony DeSpirito. Other using option strategy to generate income or provide greater downside protection such as our Buy Right and Buffer ETFs.
And in the fourth quarter, we launched a series of LifePath target date ETFs to provide an easier way to save for retirement, especially for many Americans who lack access to a workplace retirement plan. Just yesterday, the iShares Bitcoin ETF began trading in another landmark moment that advances ETF innovation and expand access to Bitcoin for investors. We will continue to provide more convenient and cost-effective investment access across asset classes through innovation, through risk management and technology.
Aladdin is the operating system uniting all of BlackRock and is fundamental and is foundational to how we serve our clients across our platform. It is the key technology that powers BlackRock and it also powers many of our clients. The need for integrated data, integrated risk analytics and the whole portfolio views across public and private markets is driving the ACV growth of Aladdin. In 2023, we generated $1.5 billion in technology service revenues. Clients are looking to grow and expand with Aladdin, reflecting strong harvesting activities with over 50% of the Aladdin sales being multi-product. Through its dynamic ecosystem of over 130,000 users, the Aladdin platform is constantly in the state of innovation. Investments in Aladdin AI co-pilots, enhancements and openness, supporting ecosystem partnerships and advancing whole portfolio solutions, including private markets and digital assets are going to further augment the value of Aladdin for our clients.
We led our industry by both being an agent for and adapting to change. Our best years have followed tough years. And just as we continue to innovate and evolve our business to stay ahead of our clients, we are also evolving our organization and evolving our leadership team. As Martin mentioned, we undertook restructuring efforts that were designed to ensure we are aligning resources to our greatest growth opportunities and client needs. As part of this, a number of valued clients -- valued colleagues and friends departed the firm. We truly appreciate the contributions that they made to BlackRock and wish all of them well.
We are continuing to anticipate what clients needs and shaping BlackRock so they could be getting our insights, our solutions and the outcomes that they expect from us. As we look ahead, the re-risking of client portfolios will create tremendous prospects for both our public and private market franchises. These are the times where investors are making wholesale [Phonetic] changes to the way they build portfolios. And BlackRock is leading the way and helping investors build the portfolio of the future, one that integrates public markets and private markets and it's digitally-enabled.
We view that these changes are a big catalyst for BlackRock. We set ourselves up to be a structural grower in the years ahead with a diversified platform we've built. And the need for integration data, technology and risk management will continue to drive demand for Aladdin. BlackRock was founded on the belief in the long-term growth of the capital markets. Our success has been shaped by a number of those calls and how we would evolve. Our client needs have always been our compass. As we listen to them today, we have our eyes on themes we believe that will define the next decade of asset management. We're continually [Phonetic] blurring the lines across product structure, the unprecedented need for new infrastructure driving inflation-protected current cash flow long duration returns, the accelerating capital markets and asset management industry around the world.
We are positioning ourselves ahead of these transformations by making three major changes in how we work and how we deliver for each and one of our clients. First, we're creating a new strategic global product and solution business that work across all our investment strategies, asset classes, fund structures, while enabling our ETF and index business across the firm. We have always viewed ETFs as a technology, a technology that facilitates investing. And just as our Aladdin technology has become core to asset management, so has have ETFs. That's why we believe in embedding our ETFs and index businesses across the entire firm. And that will accelerate further growth of iShares and every investment strategy within BlackRock. We are looking to the future and we believe that ETF revolution that iShares led will only continue to accelerate as BlackRock turns -- as our clients turn at BlackRock for ETFs as a preferred vehicle for investing in strategic and strategies of all types. You can make an ETF for a Bitcoin, my gosh, you can make that ETF for anything.
Second, we are creating a new international business structure to provide a unified leadership to allow us to be simultaneously more global, but much deeper local in a fast-growing international markets. BlackRock has been a central player in the growth of the global capital markets. And this is including the developing of retirement solutions in every market around the world and bringing the benefits of ETFs to every market to assist them in growing their markets. And third, we are realigning our private markets business to further leverage the potential of GIP and to meet the growing needs of our clients for infrastructure and other private market investments.
All of us at BlackRock have a lot of hard work and a lot of exciting work ahead of us. We have a track record of quick, intense and successful integrations. We'll be more nimble and aligned with clients through our new architecture and with the aim to be delivering better experiences, better performance, better outcomes for all of our clients worldwide. I see excitement and incredible amount of energy in our offices. While there's a lot of hard work to come, there really is a bright future for all of us ahead of us. Over the past few months, we're seeing decidingly more positive sentiment and tone in markets and among clients that are very optimistic we'll carry into 2024. And once again, we look forward to beginning this next BlackRock chapter with our new partners and colleagues at GIP.
We entered 2024 with $10 trillion of our clients' money. We entered the year with strong growth momentum. And we entered 2024 as an organization positioned in the future for growth and prosperity. At BlackRock, we are energized by never done attitude. And today, I really feel that we're just getting started. I see greater opportunity for BlackRock. I see greater opportunity for our clients. And I see great opportunities for our shareholders, today, tomorrow and stronger than ever before.
Let me open it up for questions. As I mentioned, Bayo will also participate in the Q&A. Thank you.
