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BlackRock Mideast Foray May Grow With Israel Infrastructure Push

Ivan Levingston

(Bloomberg) -- The world’s largest asset manager BlackRock Inc. could add to its footprint in the Middle East by joining Israel’s infrastructure boom.

Representatives of the Israeli government and the New York-based financial giant are discussing an investment in the country’s infrastructure, according to Prime Minister Benjamin Netanyahu’s top economic adviser Avi Simhon.

BlackRock expressed interest in an investment and Israel offered to help with any regulatory barriers, he said in an interview this month in Jerusalem, adding that it was too early for specifics. A spokeswoman for BlackRock in Israel declined to comment.

To cope with a low-interest rate world, investors have looked to real assets including infrastructure to wring greater returns not tied to stock and bond prices. BlackRock Chief Executive Officer Larry Fink has said the firm was chasing opportunities across the Middle East, broadening its reach to attract customers outside the U.S. in pursuit of what he sees as untapped potential abroad.

BlackRock, which has nearly $7 trillion in assets under management, joined KKR & Co. in February in agreeing to invest $4 billion in Abu Dhabi’s oil pipelines, securing two decades of guaranteed returns. In April, Fink was among executives in attendance at a financial summit in Riyadh, with BlackRock launching a dedicated Saudi exchange-traded fund tracking the kingdom’s mid- and large-cap companies.

Toehold in Israel

The money manager has already been increasing its presence in Israel, after opening its first office in the country two years ago. It’s partnered with local institutional investor Altshuler Shaham Group, and this summer cross-listed some of its exchange-traded funds on the Tel Aviv Stock Exchange.

Infrastructure may be next, especially now that the government is getting serious about giving the $370 billion economy a makeover. Netanyahu faces voters in a bid for reelection next month, potentially endangering his cabinet. Israel has the worst traffic congestion in the developed world.

The Jewish State will invest billions of shekels over the coming decade on projects that range from roads and ports, to a metro in the commercial hub of Tel Aviv. Public-private partnerships are one way that Israel is hoping to fund such spending.

Infrastructure Bonanza

A team appointed by Israel’s Finance Minister Moshe Kahlon in 2017 recommended significantly boosting infrastructure investment by 2030. Anticipated public-private partnerships will amount to about 48 billion shekels ($13.7 billion).

Simhon, the chair of Israel’s National Economic Council, said the country is dedicated to improving infrastructure and should boost spending. “We’ll do it even if it means increasing our budget deficit,” he said.

To contact the reporter on this story: Ivan Levingston in Tel Aviv at ilevingston@bloomberg.net

To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, Paul Abelsky, Stefania Bianchi

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