Blackstone's debut infrastructure fund makes $3.3bn acquisition

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Blackstone’s mega infrastructure fund has announced its first deal with an agreement to buy a controlling stake in Tallgrass Energy for $3.3bn (€2.87bn).

In a joint statement, Blackstone and Tallgrass said Blackstone Infrastructure Partners will buy US midstream infrastructure’s general partner, as well as around 44% economic interest in Tallgrass.

Affiliates of GIC, Singapore’s sovereign wealth fund, will be a minority investor in the transaction.

Tallgrass president and CEO David G. Dehaemers Jr, said: “Blackstone’s scale, long-term capital, and investment expertise across the energy industry make it an ideal partner for our business as we continue to create value and invest capital in accretive growth opportunities.”

Sean Klimczak, the global head of infrastructure at Blackstone, said: “This transaction represents a rare opportunity to invest in a large-scale US midstream infrastructure platform that connects high-production supply basins to key markets and is underpinned by long-term contracts.

“We are excited to partner with and to support the established Tallgrass management team over the long term as they execute on their robust backlog of attractive growth projects.”

The deal is expected to close in the current quarter.

The deal is the first announced transaction for Blackstone’s first open-ended infrastructure fund which has support from Saudi Arabia’s sovereign wealth fund and is seeking to raise $40bn.

In July last year, Stephen Schwarzman, CEO of Blackstone, confirmed in an investor call, that it had raised $5bn for the fund, but had yet to reveal any specific investments made.

“We are now fully in deployment mode and are evaluating a pipeline of interesting opportunities,” Schwarzman said at the time.

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