Good morning. My name is Jennifer, and I will be your conference facilitator today. I would like to welcome everyone to the BlackRock, Inc. Fourth Quarter 2023 Earnings Teleconference. The participants for today's call include Chairman and Chief Executive Officer Laurence D. Fink, Chief Financial Officer Martin S. Small, President Robert S. Kapito, General Counsel Christopher J. Meade, and Founder and Chief Executive Officer of Global Infrastructure Partners Adebayo Ogunlesi. Mr. Meade, you may begin your conference.

Good morning, everyone. I'm Chris Meade, the General Counsel of BlackRock. Before we begin, I'd like to remind you that during the course of this call, we may make a number of forward-looking statements. We call your attention to the fact that BlackRock's actual results may, of course, differ from these statements. As you know, BlackRock has filed reports with the SEC, which lists some of the factors that may cause the results of BlackRock to differ materially from what we say today. BlackRock assumes no duty and does not undertake to update any forward-looking statements. So with that, I'll turn it over to Larry.

Thank you, Chris, and good morning to everybody, and Happy New Year. Thank you for joining us today to discuss BlackRock's fourth quarter and full year results. We're also very excited to announce our agreement to acquire Global Infrastructure Partners, and I'd like to welcome all our new partners from GIP and their Chairman and my friend and founder Bayo Ogunlesi is here with me, alongside with Rob and Martin, we're all here today to answer your questions after our prepared remarks.

Thank you, Larry. My fellow founders and colleagues across GIP and I are very excited about the opportunity to join BlackRock. Our combination will drive even better opportunities for our clients. All of us at GIP share the vision of delivering better outcomes with clients and leading critical global investments that drive economic growth. Thank you.

Thank you, Bayo. This is another truly transformational moment for BlackRock. Our firm is what it is today because we've taken a long-term view on what market forces will drive outsized growth for our clients and for our firm. We're doing that again today, guiding us always by the needs of our clients. Growing public deficits, a modernizing digital world, advancing energy independence and the energy transition are driving the mobilization of private capital to fund critical infrastructure. Infrastructure investment is a fast-growing market. In a higher rate environment, the ability to drive operational enhancements will be critical to investment performance. Today, we are announcing two transformational changes in anticipation of the evolution we see ahead for the asset management industry and for the entire global capital markets. Our strategic re-architecture of our organization will simplify and improve how we work and deliver for our clients. And the acquisition of GIP will propel our leadership in a fast-growing market for hard asset infrastructure. These transformations in total are the largest at BlackRock since we acquired BGI nearly 15 years ago. The planned combination of BlackRock's infrastructure platform and GIP will provide clients access to market-leading investments and operating expertise across infrastructure and private markets. The integrated platform will deliver clients substantial scale as the second largest private markets infrastructure manager in the world with over $150 billion in client assets. In addition, GIP will bring dedicated investment and operational improvement teams with track records of delivering deep value enhancements, which have led to impressive returns throughout its existence. With a strong common culture of serving clients with excellence together, we will deliver for our clients a holistic global infrastructure manager across equity, debt, and solutions. We will provide the full range of infrastructure sector exposures and will offer unique originations across developed and emerging markets. BlackRock has developed a broad network of global corporate relationships through many years of long-term investments in both debt and equity. These long-term relationships will help us lead critical investments in infrastructure that will improve outcomes for communities around the globe and generate long-term investment benefits for our clients. I know I speak for the entire BlackRock Board of Directors, BlackRock's leadership team and all of our employees when I say we could not be more excited about the prospects of a BlackRock family with our colleagues from GIP. We similarly look forward to welcoming our new clients and deepening our relationships with those clients who already worked with both of us. BlackRock's industry leadership comes from delivering sustained performance, innovating, and staying ahead of the needs of our clients. Today, we announced several organizational changes to simplify and improve how we work and how we deliver for clients. In anticipation of the major calls we are making on the future of the capital markets and the entire asset management industry. The strong senior leaders taking on new and expanded roles will keep us more tightly connected, stimulate fresh thinking and help us better deliver for all our clients. Let me now turn to Martin to cover our 2023 results and take you through the specifics of the transaction, our quarter before I offer further context.

Thanks, Larry. Good morning, and Happy New Year to everyone. Before I pass it back to Larry, I'll review our financial performance and business results and provide more detail on the GIP transaction. We plan for a longer call today so that we have plenty of time for questions. While our earnings release discloses both GAAP and as-adjusted financial results, I'll be focusing primarily on our as-adjusted results. The last two years have been a character-building and inspiring time for investors, for clients, and certainly for us at BlackRock. The monetary policy shock of a rapid rate rising campaign upended 10 years of asset allocation practices and spurred repositioning of portfolios into cash and money market funds at the expense of risk assets. At BlackRock, our business is to serve clients with excellence and help them design portfolios for the future. We built BlackRock to be a structural grower by having a platform of investment, technology, and product capabilities that go beyond investment outcomes. They deliver client scale; they deliver clients' business efficiency. Whether clients are making wholesale portfolio allocation changes or just executing on tactical adjustments, they're doing it all within the BlackRock platform. We've spoken throughout the year about what conditions we'd expect to bring investors out of cash and into risk assets. It's generally unfolding as we described, with greater clarity on terminal rates in the fourth quarter we saw evidence of portfolio re-risking and we expect this trend to accelerate in 2024. BlackRock is a share winner when there's an asset in motion and clients continue to consolidate more of their portfolios with us. In 2023, BlackRock generated $289 billion of total net inflows and delivered 1% organic base fee growth. Importantly, we finished the year with significant momentum in the fourth quarter generating approximately $96 billion of total net inflows. In November and December, we saw a surge in flows resulting in 6% annualized organic base fee growth for the last two full months of the year. Full year revenue of $17.9 billion was relatively flat year-over-year. Operating income of $6.6 billion declined 2% from 2022, while earnings per share of $37.77 increased by 7%. For the fourth quarter, revenue of $4.6 billion was 7% higher year-over-year, driven by the impact of higher markets on average AUM and higher performance fees. Quarterly operating income of $1.7 billion was up 9%, while earnings per share of $9.66 was 8% higher versus a year ago, also reflecting higher non-operating income in the current quarter. Non-operating results for the quarter included $122 million of net investment income, driven primarily by mark-to-market gains in our private equity co-investment portfolios. Our as-adjusted tax rate for the fourth quarter was approximately 24%, driven in part by discrete items. We currently estimate that 25% is a reasonable projected tax run rate for 2024, though the actual effective tax rate may differ because of nonrecurring or discrete items or potential changes in tax legislation. Fourth quarter base fees and securities lending revenue of $3.6 billion was up 6% year-over-year, driven by the positive impact of market beta on average AUM, 2% organic base fee growth, and higher securities lending revenue. Sequentially, base fee and securities lending revenue was down 2%. On an equivalent day count basis, our annualized effective fee rate was approximately three-tenths of a basis point lower compared to the third quarter. This was primarily due to lower securities lending revenue, underperformance of non-U.S. equity markets, and client preferences favoring lower fee fixed income and cash. As a result of accelerating organic growth and global equity and bond market appreciation toward the end of the quarter, we entered the first quarter with an estimated base fee run rate approximately 6% higher than our total base fees for the fourth quarter. Fourth quarter and full year performance fees of $311 million and $554 million, respectively, increased from a year ago, reflecting higher revenue from liquid alternatives and long-only mandates. Quarterly technology services revenue increased 7% year-over-year, and full year revenue of $1.5 billion increased 9% and reflected the successful onboarding of new clients and large e-Front on-premises licenses renewals in the third quarter. Annual contract value, or ACV, increased 10% year-over-year as clients increasingly partnered with BlackRock for integrated technology solutions to drive business transformation and scale. We remain committed to low to mid-teens ACV growth over the long term. Total expenses increased 1% in 2023, reflecting higher compensation, G&A and direct fund expenses. We effectively managed our discretionary spending in 2023 and we'll continue to be disciplined in focusing our resources in areas with the greatest opportunity. Our fourth quarter operating margin of 41.6% increased by 40 basis points year-on-year as we continue to drive operating leverage and profitable growth after the market shock of 2022. Our full-year as-adjusted operating margin of 41.7% was down 110 basis points from a year ago. The decline primarily reflected the negative impact of markets and foreign exchange movements on our 2023 entry rate revenue as well as critical investments in our people and technology. During the year, we reorganized two of our fastest-growing businesses, private markets in Aladdin to stay ahead of our clients' evolving needs and build on our past successes in these areas. These specific groups further simplified their structures, resulting in a fourth quarter restructuring charge of $61 million, comprised of severance and accelerated amortization of previously granted deferred compensation awards. This charge appears as a single line expense item on our 2023 GAAP income statement and has been excluded from our as-adjusted results to enhance comparison to prior periods. In addition, we made resourcing decisions to free up investment capacity for our most important growth initiatives. This resulted in a one-time compensation expense of $28 million in the fourth quarter, which is included in our as-adjusted results. Overall, these two actions impacted approximately 3% of our workforce by taking a targeted and disciplined approach to how we shape our teams and evolve our skill sets to meet changing market and technology environments; we increased investment capacity, we enhanced organizational expertise, and we created opportunities for operating leverage and career growth. Looking forward, we're prioritizing investments to propel our differentiated organic growth and operating leverage. We'll aim to align investment spending with our highest conviction structural growth areas, find additional ways to variabilize expenses and generate fixed cost scale through technology, automation, and optimization of our footprint through our innovation hubs. Excluding the impact of the GIP transaction at present, we'd expect our headcount to be broadly flat in 2024. Also excluding the impact of GIP and related transaction costs, we'd expect a low to mid-single-digit percentage increase in 2024 core G&A expense. Most core G&A growth should come from continued investment in technology as we look to operate more efficiently and better serve our clients. One of our biggest long-term advantages has been scale. Our ability to add significant assets managed with excellence without growing expenses linearly. Our platform strategy has delivered scale and operating leverage over time, and we're committed to delivering a premium operating margin. Our capital management strategy remains consistent. We invest first either to scale strategic growth initiatives or drive operational efficiency and then return excess cash to our shareholders through a combination of dividends and share repurchases. In 2023, we returned over $4.5 billion to our shareholders through a combination of dividends and share repurchases. Share repurchases have been a consistent element of our capital management strategy. Since 2013, we've repurchased close to $15 billion of BlackRock stock, which generated an unlevered compound annual return of 14% for our shareholders. Over this time period, we reduced our share count by nearly 23 million shares or 13%. For the trailing five years, we've lowered our share count by 10 million shares completing $7.8 billion of share repurchases at an average price of $563 for an IRR of over 15%. BlackRock's Board of Directors declared a quarterly cash dividend of $5.10 per share, representing an increase of 2% over the 2023 level. At present, based on capital spending plans for the year and subject to market conditions, including the relative valuation of our stock price, we're targeting the purchase of $1.5 billion of shares during 2024. Full year total net inflows of $289 billion were positive across active and index as well as regions, led by $156 billion of net inflows from clients in the United States, and we had 70 products across our ETF and mutual fund ranges with over $1 billion in net inflows. BlackRock generated industry-leading ETF net inflows of $186 billion in 2023, representing 6% organic asset growth led by $112 billion of net inflows into our bond ETFs. Fourth quarter ETF net inflows of $88 billion reflected significant momentum into year-end helped by seasonal tax trades and portfolio reallocations. We saw $28 billion of net inflows into precision exposures as institutional clients use these highly liquid instruments to re-risk in the quarter. With safe-haven cash providing positive returns, full year and fourth quarter retail net outflows of $8 billion and $9 billion, respectively, were primarily due to allocations out of rising rate-sensitive strategies, namely liquid alternatives and flexible bond funds. This was partially offset by strength in Aperio, which saw record net inflows of $12 billion in 2023. Aperio AUM since acquisition has grown 95% to $80 billion. BlackRock's institutional business generated net inflows of $32 billion in 2023, led by active net inflows of $87 billion including the funding of several significant outsourcing mandates throughout the year. Index net outflows of $55 billion were driven by redemptions from our low-fee equity strategies as several large clients adjusted their allocations or redeemed for cash needs. Finally, BlackRock's cash management platform saw $33 billion of net inflows in the fourth quarter and $79 billion of net inflows in 2023. We're pleased with the continued strong growth in our cash and liquidity business with year-end AUM up 14% or over $90 billion year-on-year. We're leveraging our scale and integrated cash offerings to engage with clients who are using these products not only to manage liquidity but also to earn attractive returns. Demand for private markets remains strong, with $14 billion of net inflows into BlackRock illiquid strategies during the year driven by infrastructure and private credit. We continue to expect these categories to be our primary growth drivers in the coming years. Turning to our planned acquisition of GIP, this is an exciting day for us, our new partners, our clients, and our shareholders. The combination will mark a transformational change in our private market scale and growth. GIP is the world's leading independent infrastructure manager with current client AUM of over $100 billion and fee-based AUM of over $60 billion. The acquisition will create a highly complementary pro forma $150 billion infrastructure platform post-closing, tripling BlackRock's infrastructure client assets. The integration will nearly double our private markets management fees to over $1.5 billion and add over $400 million in post-tax annual FRE with FRE margins above 50%. Since its founding in 2006, GIP has successfully scaled its equity flagship series from its $5.6 billion Fund I to $20-plus billion in the most recent vintages. GIP's current team of approximately 400 employees across 11 global offices has delivered strong long-term performance for clients and is expected to generate approximately $760 million of management fee revenue in 2023. Turning to the financial terms of the transaction, we are acquiring 100% of the business and assets of GIP for total consideration of $3 billion in cash and approximately 12 million shares of BlackRock stock. Seven million shares will be paid at closing and five million shares will be paid in approximately five years, subject to certain performance measures. BlackRock will fund the cash consideration through $3 billion of additional debt which will not meaningfully change its leverage profile. Primarily through growth synergies from proprietary deal origination, larger transaction sizes, capital formation scale, and multi-asset class infrastructure investment innovation, we see opportunities to drive significant value creation for BlackRock shareholders. The terms of this transaction ensure long-term continuity and strong alignment of interest among GIP and BlackRock to best serve clients, employees, and shareholders. A substantial majority of the consideration paid at closing and approximately 75% of nominal total transaction consideration will be paid in BlackRock common stock. GIP leadership will become meaningful shareholders of BlackRock, with a shared ambition of driving One BlackRock outcomes for our clients and shareholders. One hundred percent of carried interest and capital commitments from all existing GIP funds will continue to be owned by the GIP owners and employees. These are not economically included in the transaction perimeter and support long-term retention and incentives of GIP employees. After closing, GIP's management team will lead our combined infrastructure platform, working with BlackRock's strong investment teams in equity, debt, and solutions. The GIP team will bring a talented group of investment and operational improvement professionals with a proven track record of building and running high-performing private markets businesses. Each of the GIP founders will become party to a shareholder's agreement that requires shares to be voted in accordance with the recommendation of BlackRock's independent Board at any meeting of BlackRock shareholders. We've provided additional detail on the transaction structure and terms in a supplement posted to the BlackRock Investor Relations website this morning. We expect the transaction to be modestly accretive to as-adjusted EPS and operating margin in the first full year post-close, which will exclude transaction-related costs. Given the structural growth trends of the private infrastructure market, and what we see as a best-in-class whole portfolio infrastructure investing capability, we believe the transaction will be accretive to long-term organic asset and base fee growth. These abilities can be a key source of earnings diversification and growth acceleration to meet or exceed our through-the-cycle 5% or better organic growth ambitions. Building on strong structural growth trends over this past year, and the over $1.9 trillion of organic asset growth over the last five years, we're investing to deliver the industry's only comprehensive platform across public markets, private markets, and investment technology. Having delivered differentiated organic growth and operating margin across the weakest markets in decades, we believe markets are trending to be strong for 2024 with a more risk-on tone. BlackRock's a share winner when assets are in motion. We see the pent-up demand behind over $1 trillion in money market fund flows this year poised to deliver significant opportunities across risk assets. Our combination with GIP will put BlackRock in the leadership position to drive great outcomes for clients and deliver new engines of earnings growth for our shareholders. We've built an industry leader in structural growers like ETFs, model portfolios, outsourcing, and investment technology with Aladdin. We're building a private markets leader at new levels of scale and we see the best opportunities we've had in years to get closer with clients and raise significant private capital. We enter 2024 in a stronger position than ever, and all of us at BlackRock are excited about the opportunities ahead for our clients, the firm, and our shareholders.

Thank you, Martin. We'll have plenty of time for your questions later, but I want to explain how we assessed the merging of our firms with GIP, why we believe this is the right time, and how private infrastructure markets can benefit our clients, employees, and shareholders. The infrastructure market, valued at $1 trillion, is predicted to be one of the fastest-growing segments of private markets in the coming years. Various long-term structural trends are fueling growth in infrastructure investments, including rising global demand for upgrading digital infrastructure such as fiber broadband, cell towers, and data centers. There is also a renewed focus on investing in logistics hubs like airports, railroads, and ports as supply chains adapt, as well as an increased push for energy independence in many parts of the world, supported by decarbonization efforts. Both in the U.S. and globally, there is a critical need for more investment in infrastructure, presenting substantial opportunities for our clients. The heightened demand for infrastructure, combined with record government deficits, means private capital is more essential than ever. This imbalance between supply and demand offers enticing investment opportunities. Corporates are also eager to collaborate with partners on new projects or to reduce risks on existing ones. These trends provide our clients, particularly those saving for retirement, with valuable, inflation-protected, long-term investments that we believe will shape asset management for the next two decades. Our acquisition approach has always focused on growth rather than cost reductions or consolidations. Partnerships like this have consistently led to achieving goals that neither BlackRock nor our merger partners could attain independently. I believe that merging BlackRock's infrastructure efforts with GIP will yield similar results. Transformative acquisitions have strengthened our firm and culture, attracting top talent and new skill sets. Our culture has evolved through the integration of new teams and colleagues, blending the most effective aspects of the cultures that have merged over the years. The key to our successful acquisitions has been our commitment to a unified One BlackRock culture that connects with clients through a single platform, shared objectives, and common technology. Consequently, BlackRock is more than just the sum of its parts, fueling our unique growth model. This moment is deeply personal for me as both BlackRock and GIP share similar beginnings. We started BlackRock by understanding investment risks and the drivers of returns, first in fixed income and then across equities and globally. Our goal has always been to assist long-term investors in managing risk within their portfolios through technology. This mission drove our early investments in Aladdin and ongoing enhancements to improve our understanding of risk factors and deliver superior results for our clients. GIP began with a similar concentration on infrastructure, focusing on operational risks and enhancing business efficiencies, much like BlackRock's emphasis on risk in fixed income. GIP developed an active strategy to evaluate and mitigate operational risk. My partners and I helped create the mortgage-backed securities market, while Bayo and his GIP colleagues pioneered modern infrastructure investing in private markets. Many founders from both BlackRock and GIP share early career experiences, establishing common roots from positive connections and some challenges. By combining BlackRock’s existing infrastructure capabilities with GIP's, we will create a leading infrastructure business with exceptional origination and asset management skills. GIP will complement our efforts with minimal overlap in client and investment programs within BlackRock’s existing franchises, which encompass diversified infrastructure, Infradebt, Infra solutions, climate infrastructure, and decarbonization partners. BlackRock has grown its infrastructure platform, with assets under management rising from our initial investment in First Reserve in 2017 to $50 billion today. We have already demonstrated our access to significant capital sources, winning deals like the ADNOC pipeline project and being selected as partners with sovereign wealth funds and governments on key climate infrastructure initiatives. Our sourcing capabilities, enhanced by larger asset management scale, will allow us to take on more substantial investments. The combination of GIP and BlackRock will further accelerate our investment scale, allowing for quicker growth. Our strong connections with clients, businesses, governments, and sovereign wealth funds will help us capitalize on investment opportunities. GIP has a robust pipeline of proprietary deals, aided by their relationships and success track record, including long-term joint ventures with major industrial partners. GIP's global investments include Gatwick Airport, Edinburgh Airport, Sydney Airport, Cypress One Data Center in the Port of Melbourne, and several large renewable platforms. The merger of BlackRock and GIP will enhance our ability to link clients with larger and more lucrative opportunities while also driving growth, diversifying revenues, and generating profits for our shareholders. Like Rob and me, Bayo and his partners are all founders. We are thrilled to bring in new partners and colleagues. I am pleased that approximately 75% of the consideration for this transaction will be in BlackRock stock. The founders of GIP will become significant shareholders in BlackRock, and we plan for Bayo to join our Board of Directors after the transaction closes. There is no question, both spiritually and financially, that we are long-term partners, aligned in interests as substantial shareholders alongside our wider shareholder base. Our One BlackRock culture has been crucial to our success over the past 35 years, and our cultural alignment has been essential throughout our history of successful mergers and acquisitions. From inception to the present day, our firm holds a purpose-driven focus, zeroed in on clients, risk management, and powered by technology and data. The merger will bring an influx of senior private market talent to BlackRock, as GIP founders will lead our integrated infrastructure platform with skilled investors and business strategists. They will instill a strong investment culture and commitment to collaboration across One BlackRock. I am confident that we will look back on this day as another pivotal moment in BlackRock’s history, reminiscent of our acquisitions of BGI, Merrill Lynch Investment Management, and our early Aladdin development days. Our ability to adapt and grow has led to a total return of 9,000% for our shareholders since our IPO in 1999, far surpassing the 490% return of the S&P and showcasing a business model that serves all stakeholders. I genuinely believe we are in a stronger position than ever and am optimistic about the opportunities ahead. BlackRock was founded on the belief in long-term growth within capital markets. We have remained committed to this principle, ensuring clients are at the heart of our priorities. We firmly believe in the long-term potential of capital markets, and that belief continues to guide BlackRock. Our ties with clients have never been stronger; thousands of clients managing millions of individual accounts have entrusted BlackRock with $1.9 trillion of net new business over the past five years. Many more utilize our technology to support their growth and adaptability. Over the years, we have experienced organic growth along with a long-term upward trend in capital markets, reflected in our client assets reaching $10 trillion, which increased by over $1.4 trillion in 2023. Whether in good or bad times, our clients’ moves to either increase or decrease risk show that more of their portfolios are consolidating with BlackRock, highlighting our industry-leading organic growth. In 2023, our clients awarded us $289 billion of new assets during a period marked by rapid changes and significant portfolio risk adjustments. BlackRock's distinct business model allows us to continue growing alongside our clients while maintaining positive organic base fee growth. Our growth has persisted irrespective of market conditions, even when much of the industry has faced outflows. I recall periods in 2016 and 2018 when uncertainty affected investment strategies among institutions and individuals. Clients opted to de-risk and move to cash, yet BlackRock stayed engaged with them, delivering strong investment performance and innovative products, along with tailored portfolio design advice. When clients were ready to re-enter the markets, they chose BlackRock, leading to record flows and organic base growth that met or exceeded expectations. As we have witnessed, when investors are ready to invest again, they turn to BlackRock. Flows and organic base fee growth picked up towards the end of the year, resulting in $96 billion of total net inflows in the fourth quarter, positioning us with great momentum as we enter 2024. I spent much of 2023 traveling to meet with clients worldwide, and I plan to continue this in 2024 starting this month. Our partnership approach and the performance we deliver resonate well in markets where we have established a solid presence and in those where our influence is just beginning to grow. Companies and clients increasingly want to collaborate with BlackRock. Firms where we invest appreciate our consistent, long-term commitment as capital providers. We invest early and remain committed through market cycles, whether it involves debt or equity, pre-IPO or post-IPO. Companies recognize the uniqueness of our global relationships, our brand, and our extensive expertise across various sectors and markets. This makes us a highly valuable partner and enables us to contribute to their sourcing and performance for our clients. For instance, in November, our diversified infrastructure division invested $550 million in Stratos, a cutting-edge direct air capture facility in Texas that is expected to become the world's largest upon completion. Through our joint venture with Occidental Petroleum, we provide our clients access to a unique energy infrastructure project. This represents just one of many distinctive deals we've secured for clients over the last 18 months. In the U.S., we've collaborated with AT&T and GigaPower on investments in Jupiter Power. International investments include projects like Brazeau in Brazil, First Air in South Korea, Acacia Energy in Australia, and the Takata Wind Farm in Kenya. Just last month, we announced an innovative partnership with Altera, committing to a $2 billion investment in climate initiatives across BlackRock's private debt and infrastructure equity strategies, marking one of our largest private markets mandates. This adds to our robust record in transition investments, including ventures in emerging markets with our $100 billion transition investment platform. BlackRock's extensive network of relationships, analytics, data, and adaptable capital positions us to secure unique deals for our clients, mobilize assets, and foster innovation and economic growth. Our active investment insights, expertise, and strong investment performance further set BlackRock apart in the markets. In 2023, we attracted nearly $60 billion of active net inflows, contrasting sharply with outflows experienced by much of the industry. Across our active franchise, BlackRock has consistently delivered strong investment performance, with 87% and 92% of our fundamental equity and taxable fixed income assets surpassing benchmarks or peer medians in the past five years. In ETFs, BlackRock ranked as the industry leader for net inflows, generating $186 billion in 2023. Our established leadership in the ETF sector demonstrates our global reach and deep connections with our clients. We are the most expansive and diversified ETF provider in both the U.S. and globally, offering liquidity, price discovery, and market efficiencies to investors everywhere. Notably, nearly half of our 2023 iShares net inflows originated from ETFs listed internationally in local markets, led by $70 billion in inflows from our European iShares. BlackRock maintains the top share of the European ETF market, where industry flows increased by 70% in 2023. Trends that took root in the U.S. years ago, such as the growth of fee-based advisory and model portfolios, are just beginning to emerge in Europe. Adopting a client-centric approach to product innovation, BlackRock continues to develop offerings tailored to the new investment landscape. We launched 19 active ETFs in 2023, leveraging the ETF structure benefits to help clients achieve desired investment outcomes. Some strategies incorporate insights from active portfolio managers, while others utilize option strategies to generate income or enhance downside protection, such as our buy-write and buffer ETFs. In the fourth quarter, we rolled out a series of LightPath Target Date ETFs to simplify retirement saving for many Americans without access to employer-sponsored retirement plans. Recently, the iShares Bitcoin ETF was launched, representing another milestone in ETF innovation and expanding Bitcoin access for investors. We will persist in offering more accessible and cost-effective investment methods across asset classes via innovation, risk management, and technology. Aladdin serves as the foundational operating system that connects all of BlackRock, underpinning how we serve clients across our platform. It is essential technology for both BlackRock and many of our clients. The demand for integrated data, risk analytics, and comprehensive portfolio views across public and private markets is driving Aladdin's growth. In 2023, we generated $1.5 billion in technology service revenues. Clients aim to expand with Aladdin, reflected in robust activities, with over half of Aladdin sales involving multiple products. The Aladdin platform, with over 130,000 users, remains in a state of continuous innovation. Investments in Aladdin's AI capabilities, enhancements, partnerships, and whole portfolio solutions, including those for private markets and digital assets, will further enhance its value to clients. We have led our industry by being both an agent of and responsive to change. Our most successful years have often followed challenging ones. As we adapt and advance our business to stay ahead of client needs, we also evolve our organization and leadership team. As Martin highlighted, we have instituted restructuring efforts to better align resources with our key growth areas and client requirements. This has meant that some valued colleagues and friends have departed the firm, and we sincerely appreciate their contributions to BlackRock and wish them well. We remain focused on anticipating client needs and shaping BlackRock to deliver the insights, solutions, and results they expect from us. Looking ahead, the re-risking of client portfolios presents tremendous possibilities for both our public and private market divisions. This is a time of significant change in how investors build their portfolios, and BlackRock is at the forefront of helping investors create the portfolios of the future, integrating public and private markets with digital support. We see these changes as major catalysts for BlackRock; we have positioned ourselves for sustained growth with our diversified platform. The demand for integrated data, technology, and risk management will continue to bolster interest in Aladdin. BlackRock was founded on the belief in the long-term potential of capital markets. Our achievements have stemmed from various key decisions and how we evolve. Our clients' needs have consistently guided us; as we listen to them today, we focus on themes defining the next decade of asset management, including the blending of product structures, the urgent need for new infrastructure creating inflation-protected cash flow and long-term returns, and the rapidly evolving capital markets and asset management sectors worldwide. We are proactively positioning ourselves to address these transformations by implementing three significant changes in our operations and services for our clients. First, we are establishing a new strategic global product and solution division that will operate across all investment strategies, asset classes, and fund structures, while enabling our ETF and index business to flourish throughout the firm. We have always perceived ETFs as a technological advancement for investing, and just as Aladdin technology has become integral to asset management, so have ETFs. We believe that integrating our ETF and index operations across the entire firm will further propel the growth of iShares and all investment strategies within BlackRock. Looking forward, we assert that the ETF revolution led by iShares will only gain momentum as our clients increasingly turn to BlackRock for ETFs as their preferred investment vehicle. If we can create an ETF for Bitcoin, we can create one for virtually anything. Second, we are restructuring our international business to provide cohesive leadership, enabling us to become more globally simultaneous while deepening our local presence in rapidly growing international markets. BlackRock has played a significant role in the expansion of global capital markets, including developing retirement solutions worldwide and introducing ETF advantages to support market growth. Third, we are realigning our private markets division to fully harness GIP's potential and meet our clients’ growing demands for infrastructure and other private market investments. We have much hard work and exciting endeavors ahead at BlackRock. Our history of swift, intense, and successful integrations empowers us to align better with clients through our new structure, aiming to enhance experiences, performance, and outcomes for all our clients globally. I sense the excitement and energy in our offices. While the road ahead will require effort, a bright future is waiting for us all. In recent months, we have observed considerably more positive sentiment and outlook among markets and clients, and we are optimistic this will continue into 2024. We eagerly await starting this next chapter of BlackRock alongside our new partners and colleagues at GIP. We enter 2024 with $10 trillion of client assets, a strong growth trajectory, and an organization positioned for future growth and success. At BlackRock, we are invigorated by a relentless drive to achieve more. Today, I genuinely feel that we are just beginning our journey. I see great potential for BlackRock, our clients, and our shareholders, both now and moving forward. Let me open the floor for questions. Bayo will also join in the Q&A. Thank you.

Thank you. Your first question comes from Craig Siegenthaler from Bank of America.

Good morning, Craig. Happy New Year.

I hope everyone is doing well, and congrats on the deal.

Thank you.

My question is actually on the GIP deal. So this is a high-quality business, strong track record. It's big enough to go public, stay independent, but they chose BlackRock, and they decided to take stock. So I imagine gross synergies were a driver. So my question is really on the strategic rationale. How can BlackRock's global distribution platform accelerate their growth? And do you see specific client segments, and I'm thinking private wealth, where you see low-hanging fruit?

Great question. Bayo and I will address this. Let me reiterate the strategic rationale. As I mentioned earlier, and I believe Bayo would agree, we are at the start of a promising investment landscape for infrastructure. Deficits are increasingly significant, making it tougher for governments to finance deficits. Consequently, more governments are turning to public-private partnerships. GIP's success in the U.K. and Australia demonstrates effective cooperation with governments in asset sales while leveraging the private sector to enhance service quality. I anticipate substantial capital will be needed as we transition to digital solutions, especially to upgrade electrical power grids globally. The associated capital needs will be immense. From my discussions with global leaders, the emphasis on energy independence is growing, and governments are actively seeking to enhance their energy sources. Moreover, the capital necessary for developing decarbonizing investments like wind and solar is crucial for economic growth. Decarbonizing the world demands significant capital and infrastructure investment. As global interconnectivity increases, the need for port upgrades becomes critical. As more people enter the middle class, air travel demand rises sharply, leading to a growing necessity for high-quality airports. This trend extends to corporations, which have traditionally sold off divisions to private equity but are now opting to sell portions while retaining significant stakes in their infrastructure or partnering, as seen in deals like those we’ve made with Occidental Petroleum for Air Capture and BlackRock’s arrangement with AT&T for 5G expansion in the U.S. These examples underscore the vast industrial opportunities we foresee. Over the next decade, we expect significant expansion in global capital markets and infrastructure, leading to a continuously rising demand for capital in this sector. As I mentioned earlier, long-duration, high-coupon inflation-protected assets represent a compelling asset class for retirement funds. We also see a significant opportunity to offer wealth management products to help clients benefit from these long-term assets, which should provide returns above public market averages. Across the board, sovereign funds, including retirement plans in both defined contribution and defined benefit areas, are gravitating towards these instruments. Conversations with clients reveal that sovereign wealth funds increasingly view infrastructure as a key growth area in their asset allocation. Now I'll pass it to Bayo to discuss BlackRock and our collaboration. From BlackRock’s perspective, we had one clear target—an organization whose business model we trust. We saw complementary skills and, most importantly, a strong leadership team led by Bayo that we believe will foster real opportunities for BlackRock. I'm pleased Bayo will be joining the BlackRock board after the closing, and we look forward to the intellectual capital GIP will bring to our already excellent infrastructure team.

What I'll add to that is I believe Larry is spot on. We are at the forefront of a golden era in infrastructure investment. The key question for us at GIP has always been how can we enhance our efforts. We will continue to pursue our current strategies independently, but we have considered the perspectives on infrastructure investing. Larry is correct; we are experiencing significant tailwinds that will fuel demand for private capital in infrastructure. Our clients, including pension funds, sovereign wealth funds, and asset managers, are eager to invest in infrastructure. They appreciate that infrastructure offers high yields; the average yield from our mature funds over the last 15 years has been 8% annually, even in a landscape of zero interest rates. They value that these assets demonstrate minimal correlation with other asset classes. In today's context, infrastructure assets are performing exceptionally well. Among our flagship funds, 12 of the 19 companies experienced double-digit EBITDA growth last year, and five had single-digit EBITDA growth. The only exception was a company that sold assets. In contrast, look at commercial real estate. Investors are drawn to these asset classes because of their low correlation, as well as the substantial downside protection they provide due to their essential services. We have been contemplating how to expedite our progress, and our partnership with BlackRock is highly advantageous. As Rob Kapito stated, this is a case where one plus one equals four. While I can’t determine if it’s three or four, I trust Rob's instincts on this. When we examine our two organizations, we see many complementary aspects. BlackRock has successfully built a strong infrastructure business, tripling its size over the years. However, they focus on mid-market investments, while we specialize in large-cap investments. Our infrastructure debt business is primarily investment grade, whereas theirs tends to be below investment grade. They offer capital solutions that we currently do not. By combining our two businesses, we can present a full range of solutions to our clients, whether they seek investment-grade debt or high-yield investment-grade debt. We believe this merger will enhance our ability to provide investment opportunities for our clients. It’s always reassuring to know you're making the right choices. The real test comes from feedback when you connect with your clients. As Larry mentioned, he and I have spoken with our clients, and their responses have been overwhelmingly positive about this transaction, benefiting us as clients, BlackRock, and GIP. I wish I had been aware that BlackRock was positioned ahead of GIP, as that would have given us leverage to negotiate a higher price, but everything has turned out very well. Additionally, it's essential to remember that we are receiving 75% of the payout in stock. Initially, BlackRock's offer was quite conservative. We appreciate that BlackRock perceives its stock as undervalued, and accepting 75% in BlackRock stock indicates that we share that view. And the final thing I'd say is we actually considered how different this call will be, as Larry mentioned. That's absolutely true. We've also examined what BlackRock has done when acquiring businesses. For instance, when they bought iShares or BGI, it had $3 trillion in assets and now stands at $10 billion. Currently, it's at $3.5 trillion. That’s a little concerning. In terms of infrastructure, they tripled the number of sites. It’s clear to me that we need to at least double the size of our infrastructure portfolio moving forward. I hope that answers your question.

Hey, good morning. Happy New Year. Congratulations on the transaction. Just curious what are the plans for integration? If you could talk about that a bit? And any particular lessons that you take away from other private market transactions, acquisitions that we've seen across the industry as you think about driving success here?

Thanks, Mike. Happy New Year. We have a really strong track record of successful integrations at BlackRock. And we believe this transaction will prove to be another success. I think Larry and Bayo spoke very much about the common cultures, the shared vision, the opportunities, the growth with clients. We know that GIP shares the same laser focus on clients and values that we do; rigorous investment processes in us, and the structuring of the transaction was also done to reduce strain on teams and help facilitate the transition into new leadership in a more diversified platform. Some of the organizational changes that we also announced today are going to help us be more nimble and aligned with our clients. We've reorganized businesses for the future with the aim of delivering better experience performance and outcomes for clients. The thing I'd add is Larry talked about in his prepared remarks, our integrated operating platform and track record and integrations. We have built our private markets business with substantial inorganic activity going back all the way to the early 2000s and we built a lot of the existing infrastructure business that we have today, also through inorganic transactions that have been successfully integrated. So we've been doing this for 10 years in the infrastructure space and look forward to accelerating it with Bayo and his partners and the entire GIP team who have substantial experience in business building and alternatives. And the last thing I'll say just about integration is I think in many ways, this is a less complex integration in that these are highly complementary platforms that Bayo just talked you through in terms of some of the differences in investing acumen and solutions on the equity side and on the debt side. And so in many ways, we have limited amounts of overlap, both in clients as well as in the characteristic of our investment solutions. In many ways, that makes the integration, I think, nimble and easier to position with clients and more agile for us to bring the platforms together.

Let me just add one thing. Bayo and I are going to be traveling a lot. With our combined organization, we have a remarkable story to share. We will be communicating this story to everyone, from corporations to governments. I recently received an email from a significant government indicating that there are additional opportunities for collaboration, which was encouraging. I truly believe it’s essential for our clients and investors who have supported BlackRock and GIP to understand the advantages of our merger and to view it as beneficial for them. Our responsibility is to ensure that everyone perceives this and that we execute effectively. We are very excited about this and I look forward to traveling with Bayo.

I'd like to focus on the organic growth outlook as we look towards 2024. There's certainly a lot of optimism regarding the increase in fixed income flows and the clearer interest rate trajectory. Could you share some insights from your initial discussions with institutional clients about their allocations and how you anticipate this will evolve throughout 2024? Additionally, concerning fixed income inflows, where do you expect the funds to come from? Will it be from money market funds, the movement of direct securities into funds, or possibly from bank deposits? I would appreciate any commentary on this.

Great, Mike. It's Martin. I'll start just on some of the organic growth outlook and then Rob will talk a little bit about your specific fixed income. In 2023, obviously, we delivered $289 billion of total net inflows and 1% organic base fee growth. We continue to have conviction here in our 5% base fee target over the long term. We've reached it on average over the last five years and met or exceeded it in six of the last 10. And importantly, I think the way our shareholders evaluate us, years marked by significant market volatility, 2016, 2018, '22, '23, we generated positive organic base fee growth. And these last two years, no doubt have been more challenged on base fee growth through tough markets, but we've continued to generate positive growth while the industry has seen decay. We don't aim, as you know, to be the fastest grower in any quarter or any year. We aim to deliver more consistent and durable organic growth through market and over the long term. I would note we saw excellent momentum to finish the fourth quarter. As I mentioned in my remarks, in November and December, we generated an annualized 6% organic base fee growth rate, and that, to me, suggests that we can trend towards our 5% through-the-cycle target as rates stabilize and the market is more constructive. This is some of the best organic base fee growth momentum we've seen since 2021. I do want to flag two things. The first of which is I'd particularly flagged that iShares in Europe is really well positioned, and I think it's going to be a bigger part of the organic base fee growth story over time. European ETF industry flows are up 70% year-on-year. European iShares had almost 50% flow market share. And a lot of the long-term trends that propelled the U.S. industry to high growth rates are taking hold in Europe. So I think it's just the beginning. We also see this combination with GIP and the potential for higher management fee growth in illiquid alternatives as bolstering, diversifying our overall organic base fee growth trajectory.

Yes. So I'll just add just two things, Mike. I wake up every morning salivating about the $7 trillion that's sitting in money market accounts that's waiting to move. And in order for it to move, you have to have a wide plate of products. That's what we have been developing in client solutions. A lot of this is going to come from money that's flowing into model portfolios, which we are the leader in. And a lot of it is going to come from digital wealth, which is a $17 billion global market. It's growing at 15%, and ETFs are becoming the investors' preferred vehicle with access to investments. And then lastly, as we blend the active and passive business together, we're going to see a lot of active fixed income portfolios move into an ETF wrapper. We're the leader in ETF wrappers as well. So I think there's a huge, huge runway for fixed income and really the wind is right behind our back for that.

Thank you. Good morning and Happy New Year. I would like to discuss the infrastructure from another angle. What is your outlook for fundraising in the next one to two years, considering the products you have and your perspective on the growth in the $760 million of fee-related revenue? Are you currently in the market for a new fund or will you be soon, and do you anticipate exceeding the $22 billion fund you had in 2019? Additionally, could you share your thoughts on creating democratized infrastructure products for retail investors that include some liquidity features?

Thanks. I'll start, and then I'm sure there'll be some additional color. First of all, clients continue very much to increase their allocations to illiquid alternatives in private markets. These are the client needs that drove our acquisition of eFront. They're the moves that bring us here today with GIP. And the moves that we've made organically and inorganically to build market-leading alternatives capabilities. At BlackRock, our alternatives client assets now total $330 billion, including liquid credit. Our private market to liquid alternatives have reached $166 billion in assets with about $140 billion in fee-paying AUM. And private credit, private equity solutions, and infrastructure were the main drivers of Q4 and full year flows with $4 billion and about $14 billion, respectively. Since 2021, we've had excellent momentum in our private markets fundraising. We've raised approximately $96 billion of gross capital across our platform, and we continue to see good momentum with clients. We're building on vintages and strong track records, so we can scale successor funds. We expect our primary growth drivers, as I said, over the next three to five years to be infrastructure and credit private equity solutions, where we've built great franchises. We continue to see terrific opportunities. Larry and Bayo have really talked about what some of these are. But I do think BlackRock has a durable competitive advantage that's been built through our public markets, relationships with global corporates, our advisory work with sovereigns in the public sector around the world as well as our technology capabilities of the year and bringing together a lot of this public and private sector long-term objectives to officially move capital to key drivers of industrial transformation. That's often when BlackRock at its best. So we're very optimistic and energized by our capital formation opportunities, particularly with our new partners at GIP. And I think as Larry and Bayo said, they're both going to be traveling a lot. So I'm looking forward to how those sessions, I think, will help us grow together. But importantly, I think really bring innovative solutions to corporates, through partnerships and unique public-private opportunities for us that will help grow our illiquid alternatives base and assets.

GIP is in the final stages of raising a very large fund, which because it's in the stages of raising the money that we cannot talk about it. So stand by. But it's in the late stages of fundraising.

The other thing is that we are very good at structuring products for the individual investor, the wealth investor, and I'm looking forward to working with Bayo's team to figure out how our teams can get together and democratize those investments because, as Larry mentioned before, this is such a perfect retirement product long duration, good yield, equity upside, it's going to open up new areas of growth that we have not tapped yet.

Good morning. Thanks for taking my question. Happy New Year. So curious, a question on the deal here. Is this a deal that you would consider transformational? Or is this more indicative of a desire to continue to add more all its capabilities going forward? And then one, just sort of a little bit more granular, the roughly $400 million in FRE is based on 2024 forecast from what I can understand. Can you give maybe an indication about where GIP's FRE was for 2023?

Thanks, Brennan, for the question. It's Martin. First of all, this is unassailably a transaction that we consider transformational. Most definitely, our clients feel its transformation. The volume of e-mails, I can see on Larry screen suggests to me that it's transformational. And what we've talked about is transformational transactions. It's transformational in terms of the capabilities that BlackRock has and can offer to clients, and it's transformational in terms of the financial and earnings impact to the firm. So those two axes are how we've always measured transformational in terms of our capabilities and in terms of the financial impact, and on both fronts, this is definitely a transformational transaction. GIP has generated really strong performance as well as FRE growth. I'm not going to comment on the 2023; I will let the 2024 speak for itself. But we continue to see great growth opportunities in terms of being able to expand fee-paying AUM across the illiquid alternatives platform with the infrastructure as a priority, as well as growing base fees in a way that adds to our 5% organic growth objective through the cycle.

Let me add some insights on our small and large transformational deals. Transformational deals can be substantial, similar to the BGI transaction. If you recall, when we announced that deal, it received significant criticism. Many did not appreciate the advantages, failed to see how active and passive strategies could align, doubted cultural integration, and did not recognize ETFs as a technological advancement. When we acquired BGI, it had under $300 billion in iShares assets, and it has since grown to over $3.5 trillion. Over the last decade, when we acquired First Reserve, it had about $3 billion, and its assets have more than tripled in the infrastructure sector. Recently, our acquisition of Aperio has resulted in a 95% increase in assets since that purchase. Additionally, in pursuing technology by acquiring eFront, we emphasized the importance of robust portfolio analytics beyond just public markets. We are now a leading technology platform for both private and public investments. All of this is connected to our global perspective on the capital markets and the technological needs within them. I firmly believe these developments will continue to unfold. As I mentioned earlier, I truly see infrastructure as being in the early stages of significant capital requirements, and given the nature of these assets, the demand will be robust. We are convinced that the next decade will heavily focus on infrastructure, which will increasingly become a vital part of the broader private markets ecosystem.

Hi, good morning, everyone. Happy New Year. How's it going? You guys have been pushing this idea that the $7 trillion in money funds will start to rotate into risk assets for a while now. But the historical data we can see from past Fed cycle does not really show that, at least from what we can see. And it looks like last year's flows maybe came more from the bank deposits than risk positions. So what are you seeing maybe that we can't see that suggest this cycle will be different? And if rates really are higher for longer, can't both money funds and bonds win with $17 trillion still sitting in bank deposits?

Yes. So it's Rob here. So the answer is it's going to be dependent upon rates and alternative investments. So I think history shows when the cycle stops, that's when people first start to re-risk. We saw about $40 billion come out of money market funds to us as people re-risk and then there's market volatility, and it stops. So I think we have to get to what people will feel is the end of the cycle in rates, and then people will look. The benefit for us is then when they re-risk, they usually come into more precision investments, which are higher fee type investments, and yield really matters. So I think if you look at it, there's a blurring between the bank deposits and the money markets, all dependent upon rates. But once that cycle stops, and it's been a start and stop over the last year, at least, especially in the fourth quarter, but that's how we look at it.

Good morning, everyone. Thank you, Larry. Happy New Year to you and the team. Congratulations on the transaction. I apologize for the interruption earlier; I missed part of the Q&A session due to my phone disconnecting. I have a technical question for Martin regarding the modest accretion as we look ahead. I'm curious about how the economics of the performance fees work. It appears you're retaining about 40% of the additional opportunity. Could you provide some insight into the returns GIP has generated historically and how these relate to performance fees? I'm also assuming that the new fund Larry is closely involved with will factor into the economics. Additionally, when you mention that the FRE margin will exceed 50%, could you elaborate on that? Can you provide details on the fee rate and the overall margin?

Thanks, Bill. I'm sorry your phone wasn't working. It's great to hear from you. Happy New Year. We expect the transaction to have a modest positive impact on EPS and operating margin in the first full year after the closing. We anticipate it will contribute positively to long-term organic asset and base fee growth over time. We expect to add over $400 million in post-tax margin accretive FRE as a result of the transaction. The transaction involves acquiring 100% of the assets and business of GIP, meaning all future management base fees will be included. This is where we derive our estimates for FRE growth beyond 2024. Regarding fee rates, they are generally comparable to BlackRock's illiquid alternatives, but anticipate rates above 100 basis points in your modeling. As mentioned in the presentation posted on the Investor Relations website, the GIP owners and employees will retain 100% of the carried interest for existing GIP funds, with future funds distributing 60% to the GIP teams and 40% to BlackRock. I won't discuss fundraising or future funds, but we expect those performance fees to come in later years, not in the near term, based on the typical trajectory for fund vintages. We anticipate an improvement in fee-related earnings growth over the next two years.

Ladies and gentlemen, we have reached the allotted time for questions. Mr. Fink, do you have any closing remarks? Thank you, operator. I want to thank everybody for joining us this morning and for your interest in BlackRock. Our fourth quarter and full year performance is a direct result of our steadfast commitment to serving clients and evolving for our long-term needs of our clients. Our acquisition of GIP and the organizational changes will be transformational in accelerating our growth ambitions and delivering value for our clients and for our shareholders. Hopefully, everyone could hear that we are incredibly excited about the opportunities ahead of us; the opportunity of having partners like Bayo and his team, and we believe we have never been in a stronger position to grow with the global capital markets and to grow and being a very large client-serving firm and helping our clients meet their future needs. Everyone, have a very good quarter and try to enjoy it as much as possible. Thank you.

This concludes today's teleconference. You may now disconnect.