Blackstone holds first close on debut infrastructure fund

The Blackstone Group has held a first close on its debut infrastructure fund on $200 million, a person familiar with the matter told InfrastructureInvestor.

The fund, Blackstone Infrastructure Partners, has been in the market since last year and is looking to raise $3 billion in total commitments, according to fundraising database InfrastructureConnect.

The first close comes amid a difficult fundraising market for infrastructure. In 2009, about $10.7 billion was raised by infrastructure funds, based on data compiled by San Francisco-based placement agent Probitas Partners.

Of that, about a quarter went to Macquarie-managed funds and a quarter to Alinda Capital Partners. Alinda Capital Partners recently held a final close on its second infrastructure fund on $4 billion, midway between its $3 billion target and $5 billion hard cap.

In response to the difficult market, many fund managers have adjusted their expectations by either reducing their fund targets or adjusting fees. Blackstone did not escape this trend, having recently cut the carried interest fee on its infrastructure fund, from 15 percent to 10 percent, according to the person.

The fee adjustment brings Blackstone closer in line with a fee structure being used by Kohlberg Kravis Roberts for its first infrastructure fund. The private equity firm entered the market last year with a $4 billion infrastructure fund that charged a 10 percent carried interest, as previously reported by InfrastructureInvestor. Market sources peg the fund’s current target at $2.5 billion.

It isn’t just private equity firms that are finding a difficult fundraising market for their infrastructure funds. Investment bank Goldman Sachs, which has been in the market with its second infrastructure fund, is also said to be finding it difficult raising capital.

A person familiar with Goldman's fundraising effort told InfrastructureInvestor that the fund is currently just shy of $3 billion. The firm is expected to hold a final close for the fund on $3 billion in two months’ time, the person said. Goldman Sachs Infrastructure Partners II is targeting $7.5 billion, according to InfrastructureConnect.

A Goldman Sachs spokesperson didn’t return requests for comment by press time.

Blackstone launched its infrastructure effort in mid-2008 when it hired Trent Vichie and Michel Dorrell of Macquarie Capital to lead Blackstone Infrastructure Partners. They have since been joined by two other team members, senior managing director David Tolley and principal Geoffrey Strong.

Tolley is a Blackstone veteran who’s been with the firm since 2000, according to the firm’s biography. Strong came to Blackstone in 2009 from Morgan Stanley Capital Partners.