Blackstone is aiming to raise up to $10 billion alongside a $20 billion anchor commitment from Saudi Arabia’s sovereign wealth fund before it begins investing from what is poised to be the world’s largest infrastructure fund.
The $10 billion total will be split between outside capital and clients with separately managed accounts, Bloomberg first reported. A source familiar with the firm’s fundraising plans confirmed the report’s accuracy to Infrastructure Investor.
The anchor commitment from Saudi Arabia’s Public Investment Fund is premised on Blackstone matching it with third party money raised from other investors, and the Saudi capital will “flow into AUM as matching capital is raised,” Blackstone president Tony James explained on an earnings call Thursday.
On the call Thursday, James added the firm will begin investing from the fund following its first close, which is expected in the first quarter of 2018. “We are really just beginning the institutional part of the fundraise,” he said. “You shouldn’t expect to see anything [in terms of transactions] until the middle part of next year.”
Despite a lack of action on the policy front, James remains optimistic regarding opportunities for the fund, which will target investments in the US.
“Based on today’s market conditions, today’s political regulations, today’s processes in Washington and everything else, [we believe] that there is a huge opportunity for the fund we are raising right as things stand,” James said. In the past year, he added, Blackstone has passed on around $9 billion in infrastructure investment opportunities that would have been a natural fit for the fund, which in May was announced to be targeting a record-breaking $40 billion.
“Our infrastructure fund will be almost unique in the market with the scale to do things no one else can do.”
James added detail on the kinds of deals it plans to target. First, Blackstone will consider publicly-listed companies to take private and enhance operations. The firm will also look at carve-outs, or valuable infrastructure assets owned by large companies that would have more value standing alone. A third target will be infrastructure firms looking for capital to expand. Finally, over time, Blackstone will seek greenfield development opportunities.
“Our infrastructure fund will be almost unique in the market with the scale to do things no one else can do,” James said.
Fundraising will continue through most of 2018, James added.