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Fried Frank acted as counsel to BlackRock in connection with the raising of Global Renewable Power III (GRP III), the largest fund to date in BlackRock’s Global Renewable Power series.

GRP III is a closed-ended fund investing in climate infrastructure assets, primarily in renewable power generation. The fund initially targeted commitments of around $2.5bn, building on the success of its predecessor fund (GRP II) which raised $1.65bn.

In fact, GRP III raised more than $4.8b of commitments from more than 100 institutional investors across 18 countries in the Americas, Europe and Asia. At final close, the fund was the largest independent climate infrastructure fund ever raised globally. Its focus reflects the evolving renewable energy market as well as investors’ growing interest in investments that support the transition to a low carbon economy.

The Fried Frank team advising BlackRock was led by UK corporate partner Kate Downey and included UK regulatory partner Gregg Beechey; US finance partner Ariel Zell; US tax partner Michelle Gold; and UK corporate associates Piers Harris, Nathan McKinnon and George Skerrett; and US tax associate Rodney Hill.

Piers Harris, Fried Frank Harris Shriver & Jacobson
Piers Harris, Fried Frank

Harris joined Fried Frank six years ago, as one of the eight lawyers that established the firm’s asset management practice in London. The team included Mark Mifsud, now managing partner of the London office, and Kate Downey, now head of the firm’s European private equity funds practice. Harris trained at Dechert, qualifying into its financial services team in 2013, before moving to Kirkland & Ellis in 2014 and then to Fried Frank in 2015.

He is a senior corporate associate on the fund formation team in London. He works across private debt, private equity, infrastructure and growth mandates, including with clients such as BlackRock, Vitol, iCON Infrastructure, Arcmont Asset Management, Copenhagen Infrastructure Partners, Crescent Capital, and Kennet Partners. Piers has previously spent time on secondment at the Financial Conduct Authority, BlackRock and Arcmont Asset Management.

“I find fund formation work very rewarding; generally, funds use partnership structures which are flexible and are relatively unconstrained by company law or equivalent legislation. As a result, I enjoy the fact that there is space for commercial innovation and much of my work is focused around clients’ strategies, and an appreciation of developments in the market, as opposed to merely clients’ legal requirements. The other aspect of fund formation that I find appealing is that it is generally collaborative rather than confrontational; investors are looking to invest with an investment manager for the long-term, and so there is an alignment of interest between parties in achieving a mutually beneficial outcome in negotiations,” Harris explains.

“I was particularly fortunate on GRP III, as, in 2016, I had spent some time on secondment to the BlackRock legal group, working closely with BlackRock’s Global Renewable Power team to raise Global Renewable Power II. On this secondment I had worked closely with several people that were central to the GRP III fundraise, this had tangible benefits in providing clear and consistent channels of communication throughout the fundraise and helped to ensure that the Fried Frank and BlackRock teams could issue-spot together in order to ensure the process remained as smooth as possible.”

The BlackRock account

BlackRock, the world’s largest asset manager, has entrusted Fried Frank with a wide variety of complex multi-billion-dollar global fund formations over the years. Recent examples of standout work from the UK funds team includes advising BlackRock on the formation of BlackRock Europe Property Fund V, which closed in May 2020 on €1.487bn of commitments, including its hard cap of €1.287bn with an additional €200m in co-investments. The firm also advised on the establishment of BlackRock Asia Property V, which closed in March 2021 at circa $1.25bn, and is focused on investing primarily in the office and retail sectors across the Asia-Pacific region.

“At Fried Frank I have benefited from working with clients to raise funds with different strategies. This perspective across the market means that there are frequently learning and development points that arise during a deal that can help influence and educate approaches with other clients in the future. For example, working with multi-currency structuring for debt managers has helped inform discussions that I have had regarding hedging for infrastructure clients. Similarly, US tax issues that have arisen in the buyout space have supported structuring approaches for growth equity clients,” says Harris.

“GRP III was a good example of this, as it gave me an insight into developments in renewable power and funds which have ESG considerations at the forefront of their investment strategies. The GRP III fundraise was a great opportunity to work through investors’ increasingly sophisticated ESG requests and to consider these, along with the client, to see what the operational and administrative impact of such requests would be. I fully expect similar discussions to occur across the industry in the coming years, at least until the market matures to recognise common ESG key performance indicators and benchmarks, and I think that Fried Frank’s experience in this space, on GRP III and for other clients, will help inform many of these conversations in the future.”

The Fried Frank team led and managed the BlackRock fundraise from inception, working closely with the legal and commercial groups within the institution. The team coordinated a diverse investor base, many of whom had divergent motivations, concerns, and areas of focus.

Fried Frank’s knowledge of BlackRock’s global fundraising activities, across mandates, ensured that the fundraising strategy applied throughout the 18-month period from first to final close was consistent with BlackRock’s approach elsewhere.

Fried Frank’s communication, including regular catchups between all partners, associates, and paralegals involved in BlackRock matters, ensured that potential concerns could be addressed early and effectively. Further, it enabled several members of the Fried Frank team to step in and assist on GRP III matters during the course of the fundraise, particularly in the run-up to large closings, without any step-down in level of exemplary client service.

The firm is continuing to work with BlackRock on complex matters arising in connection with GRP III, including ongoing co-investment arrangements and an additional proposed alternative investment structure to accommodate certain potential fund investments.

GRP III held its final closing on 31 March 2021, raising $4.8bn in aggregate commitments, significantly exceeding the fund’s initial target. Institutional investors making commitments to the fund in recent months included Border to Coast Pensions Partnership, which brings together some of the $62.2bn of UK local governmental pension scheme assets, and the $19.5bn Illinois State University Retirement System, with commitments of $125m and $100m, respectively.

“The fundraising coincided with the implementation of the EU’s Sustainable Finance Disclosure Regulation (SFDR). This regulation imposes mandatory ESG disclosure and operational obligations on managers, including those which focus on renewable energy investing. It was important that we were on top of the regulatory requirements and the impact that they would have on the fund, and the reporting and operational burden for our client, as well as monitoring the wider market implementation of SFDR to guide our client on the appropriate approach,” says Harris.

“Given that SFDR is an important consideration for any fund marketed to European investors, the entire Fried Frank asset management team was involved in high-level discussions about how this would be covered across all of our clients’ funds. A dedicated SFDR team, including our regulatory specialists, reviewed the approach to be taken and we worked closely with our clients’ internal compliance functions to ensure that the approach was appropriate. As SFDR will continue to be relevant going forward for almost all of our clients, and as other regulators are likely to use SFDR as a template for their own requirements elsewhere, it was a helpful learning process for the team to ensure that we were fully aware of the consequences of the regulation for our clients.”

Fried Frank is increasingly working with sponsors on similar impact and ESG-focused mandates. Alongside impact funds, ESG-linked lending for multiple private debt fund clients, and renewable energy funds, Fried Frank has varied and extensive experience at the forefront of this exciting industry-shift towards real sustainable investment strategies.

“The fundraising was notable for its sustained momentum. Increased investor appetite for renewable investments aligned to encourage a stellar raise of over US$4.8bn. From a legal perspective, the momentum meant that there were increased numbers of investors new to the process and/or the client. Managing multiple investors, with differing priorities and perspectives, was a challenge that led to us working closely with BlackRock’s legal and investor relations teams to ensure that investors’ requests could be appropriately dealt with alongside BlackRock’s administrative and commercial concerns,” Harris adds.

“Given the confluence of investor, manager, and regulator appetite for more ESG-driven investing, I would hope to continue to get involved in renewable, sustainable, and impact investment funds which prioritise ESG among their investment considerations as these come to market. My experience with GRP III, alongside other similar funds that I have worked on, is that there is real momentum in this space, and I would expect, and hope, that investors and managers continue to align in requiring that investments prioritise positive environmental, social, and governance impact alongside financial return.”

The BlackRock deal spanned both the pre- and post-pandemic. Prior to lockdown, Fried Frank benefited from its offices being close to the BlackRock office, which allowed for in-person structuring discussions. These were replaced, in turn, by conference calls and video calls, which Harris says, inevitably, meant some of the personal interaction was lost in the process.

“Fundraise processes such as the GRP III deal can be long and complex. Accordingly, it can be difficult to keep all parties connected if we are not in the office to check in with one-another in person. However, everyone worked really hard to maintain the same level of camaraderie and support that had been the case prior to the interruption, and this helped enormously during the GRP III fundraise,” he explains.

“For example, in addition to regular internal and client check-ins to ensure everyone was connected despite different locations, and timezones, we were also conscious to ensure that, in particular, junior members of the group were supported as the workflow increased towards closing deadlines. This level of pastoral support was key to ensuring the success, and sanity, of the team through the various lockdowns, and our hope is that the return to the office helps foster an even closer support network to encourage learning, development, and participation in client matters.”

About Piers Harris

2015-present: Associate, Fried Frank

2014-15: Associate, Kirkland & Ellis

2013-14: Associate, Dechert

2011-13: Trainee solicitor, Dechert

Who’s Who: the Fried Frank  team

Lead partner: Kate Downey (UK, corporate)

Supporting partners: Gregg Beechey (UK, regulatory), Ariel Zell (US, finance), Michelle Gold (US, tax)

Associates: Piers Harris, Nathan McKinnon and George Skerrett (UK, corporate), Rodney Hill (US, tax)

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