Market News

BlackRock Bolstering Renewable Energy Portfolio With $700 Million Buyout

Story Highlights

BlackRock makes its first investment in the RNG space. The investment will be carried out by the company’s diversified-infrastructure arm.

Investment management major BlackRock, Inc. (NYSE: BLK) recently revealed that the company is going to acquire Boston-based renewable energy company, Vanguard Renewables, for $700 million, according to a report by Wall Street Journal.

Shares of BlackRock were up 1% to close at $634.73 in yesterday’s trading session.

BlackRock’s Renewable Energy Focus Amid Economic Turmoil

With traditional fuel prices soaring and climate change a reality, BlackRock is looking to fortify its presence in the growing renewable energy space. Taking this into account, this acquisition is in line with the company’s strategy.

Vanguard Renewables converts food waste and cow manure into renewable natural gas (RNG) using facilities known as anaerobic digesters. Furthermore, leftover material from the process can be used as a low-carbon fertilizer.

The deal is also BlackRock’s first investment in the RNG domain.

Notable clients of the company include Unilever PLC’s Ben & Jerry’s, yogurt maker Chobani, and energy companies such as Dominion Energy Inc. (D) and Enbridge Inc. (ENB).

Notably, Vanguard Renewables is one of the biggest players in the exciting RNG space, with six anaerobic digesters installed in the northeastern U.S. The company hopes to have 100 digesters nationally by 2026, which would generate enough energy to power hundreds of thousands of homes.

BlackRock will be acquiring Vanguard Renewables through a fund managed by its diversified-infrastructure team. This team has invested in fossil-fuel natural-gas pipelines for cleaner-energy projects.

Management’s Commentary

Global Head of Diversified Infrastructure at BlackRock, Mark Florian said, “We think it’s the front edge of a longer-term wave.” Florian further said that BlackRock remains committed to accelerating Vanguard Renewables’ growth and environmental impact.

Wall Street’s Take

Consensus among analysts is a Hold based on 10 Buys, 25 Holds, and six Sells. The NFLX average price target of $268.59 implies upside potential of 51.5% from current levels. Shares have declined 67% over the past year.

Investors Lapping up BlackRock Stock

TipRanks’ Stock Investors tool shows that top investors currently have a Positive stance on BLK. Further, 22.5% of the top portfolios tracked by TipRanks, increased their exposure to BLK stock over the past 30 days.

Final Thoughts

BlackRock is betting big on the renewable energy space amid rising prices in the traditional energy sector. Its first investment in the RNG space in a top player like Vanguard Renewables is expected to benefit the company.

However, the company should tread this path carefully as the RNG space is an expensive one and the market size remains small at the current juncture.

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