Blackstone says $5bn infrastructure fund 'in deployment mode'

Blackstone has confirmed that it has raised $5bn (€4.28bn) for its first open-ended infrastructure fund, but has yet to reveal any specific investments made.

The US private equity firm, which has been building a new infrastructure business from scratch, revealed in its second-quarter results that it had raised $2.5bn for the fund from third-party investors and $2.5bn from the Public Investment Fund (PIF) of Saudi Arabia.

In April, IPE Real Assets reported that Blackstone hoped to raise $5bn by the end the second quarter. During an investor call, Jonathan Gray, president and chief operating officer at Blackstone, said the company had raised $4.6bn by the end of June and subsequently increased this to $5bn at the start of the third quarter.

Asked about the fund’s investment pipeline, Gray said there was “nothing we can say directly – just that we’re actively working”.

He did reveal that the newly assembled infrastructure team is looking across sectors, including midstream energy, telecoms, water, renewables, public-private partnerships and “more traditional infrastructure”.

He added: “This is a business that we think we’re really well positioned in because of the need for large amounts of capital.”

Blackstone, which recently hired Wallace Henderson from EIG Energy Global Partners and Sebastian Sherman from OMERS Infrastructure, is seeking to build a $40bn infrastructure platform at a time of acute competition for assets.

Just this week, IFM Investors observed a shift away from expensive unlisted assets like infrastructure to listed equities among Australian investors, while a report on sovereign wealth funds suggested a similar potential pullback.

But Blackstone joins a number of infrastructure fund managers continuing to raise large volumes of capital. Stonepeak Infrastructure Partners, which was founded by former Blackstone executives, recently raised $7.2bn for its latest fund. Macquarie Infrastructure and Real Assets, the world’s largest infrastructure fund manager, has also raised $2.5bn for its Super Core Infrastructure Fund.

During the investor call, Stephen Schwarzman, CEO of Blackstone, said: “We’ve received broad interest from individual institutional investors around the world and have closed on $5bn or so, and we expect to grow this business substantially over time.

“We are now fully in deployment mode and are evaluating a pipeline of interesting opportunities.”

Blackstone also confirmed IPE Real Assets’ report earlier this week that it would seek to launch its latest global real estate opportunity fund this year.

The company revealed that it would look to match the record $15.8bn raised for the last fund, Blackstone Real Estate Partners (BREP) VIII.

BREP IX will have the same investment strategy as previous funds, seeking large and complex transactions across the globe, including the acquisition of entire real estate companies.

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