And then just as importantly, in technology buying EBITDA-Front, we made a statement that good portfolio analytics are going to become very important, not just public market analytics. And we are now the leading technology platform, both in privates and publics. And you dovetail all of this is it’s all wrapped around our global view of where the global capital markets are doing. The technology needs for markets and the movement. And I do believe all of this is going to be playing out. As I said in my prepared remarks, I truly believe infrastructure and Bayo reconfirm that infrastructure is at the very beginnings as the great need of capital and because of the type of asset it is, the demand for this type of investment is really going to be strong.
And we believe, and this is what our statement is, we believe the next 10 years is going to be a lot about infrastructure. And this will become more and more of a major component of the entire private markets ecosystem.
Operator: The next question comes from Patrick Davitt of Autonomous Research.
Patrick Davitt: 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?
Robert Kapito: 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.
Operator: Your next will be our last question comes from Bill Katz from TD Cowen.
William Katz: Good morning, everybody. Thank you, Larry. Happy New Year to you and the team. Congrats on the transaction. Sorry, my phone cut out a little earlier today, the hazards of working from home. So I missed a little bit of the Q&A earlier on. Maybe for Martin, perhaps just a little technical question at this point. As you sort of model out the modest accretion as you look forward, I was just sort of wondering, how do the economics on the performance fees work? It looks like you’re keeping about 40% of the incremental opportunity. Wonder if you could just give us a sense of what kind of returns GIP has put up over time? And how does that flow down to performance fees? And then I would presume that as part of the guidance that this new fund that they’re in the market for now that Larry is so intimate is going to be coming shortly would be part of the economics.
And then when you say greater than the 50% FRE margin, can you sort of give us a little more sense on that? Can you [indiscernible] to back into the fee rate as well as the absolute margin?
Martin Small: Thanks, Bill. I’m sorry, your phone wasn’t working. So it’s great to hear from you. Happy New Year. So as we said, we expect the transaction to be modestly accretive to EPS and operating margin in the first full year post close. We expect it to be accretive to long-term organic asset and base fee growth over time. We are adding — we expect to be adding pro forma $400 million plus of post-tax margin accretive FRE as a result of the transaction. The transaction is structured so that we’re crying 100% of the assets and business of GIP. So all of the future management base fees will be within the transaction perimeter. And that’s where we derive our estimates for the 2024 and beyond FRE growth in the business. In terms of thinking about the fee rates, the fee rates are relatively comparable overall to the BlackRock illiquid alternatives, but think north of 100 basis points in terms of how you’re modeling that out.
As you noted in the deck that we posted to the Investor Relations website, the transaction is that GIP owners and employees are keeping 100% of the carried interest for existing GIP funds and future funds will be 60% to the GIP teams and 40% to BlackRock. I’m not going to talk about fundraising or future funds, but we would expect those performance fees to come on in later years, not in the near term, given the trajectory for how vintages come on. And we’d expect improvement in the fee-related earnings growth over the next two years.
Operator: Ladies and gentlemen, we have reached the allotted time for questions. Mr. Fink, do you have any closing remarks?
Laurence Fink: Thank you, operator. I want to thank everybody for joining our — 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 and 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.
Operator: This concludes today’s teleconference. You may now disconnect.
