North America: Blackstone fund nears USD 5bn first close

26 June 2018 - 12:00 am UTC

Blackstone expects to hold a first close at USD 5bn for its inaugural infrastructure fund in the coming days, Inframation confirmed. Overall, the fund manager is targeting a USD 10bn-15bn close at the end of its initial phase of fundraising by March 2019.

Blackstone Infrastructure Partners LP secured USD 2.5bn in commitments from institutional investors and USD 2.5bn from the Public Investment Fund of Saudi Arabia, through an agreement that will see the sovereign wealth fund match every dollar that Blackstone raises through third party sources. Blackstone is aspiring to raise an aggregate USD 40bn through the strategy. 

The fund is expected to pursue a cyclical raise-and-deploy capital scheme throughout its life cycle to avoid management fees on un-invested capital to its investors, Inframation understands. 

Blackstone declined comment on the situation.  

Blackstone Infrastructure Partners will predominantly target investments in North American P3s, core and core+ infrastructure assets, with an initial focus on the energy, transportation, water, waste, and communication sectors. The fund is expected to garner a 10% net IRR.  

In late December, the Pennsylvania School Employees’ Retirement System (PSERS) made a recommendation to commit up to USD 500m to Blackstone’s infrastructure fund. First close investors are entitled to a 25% management fee discount for two years, it is understood.

Blackstone Group is among the parties that submitted a first round bid to acquire 50% of Maersk’s APM Terminals division, as previously reported. However, Maersk later pulled the terminals business off the auction block.

“We don’t have any internal target for when we’ll raise the outside money or how we’ll deploy it over time,” President and COO Jonathan Gray said about the fund during Blackstone’s 1Q18 results call. “We’re pretty confident that in the fullness of time we’re going to raise matching funds and build a very large business, but there’s no set time limit.” 

New Mexico commits to energy fund 
Blackstone also recently launched its third energy infrastructure-focused fund, Blackstone Energy Partners III, whose ambitions include a target of USD 4.5bn and a gross IRR of 20%. The New Mexico State Investment Council approved a USD 50m commitment to the fund on 26 June.

The council has a long-standing relationship with Blackstone, having also made commitments Blackstone Energy Partners II (USD 75m) and Blackstone Infrastructure Partners LP (USD 100m).