Blackstone plans infra fundraise

The private-equity firm says it has so far deployed close to $6bn of equity in the asset class, with its president boasting returns ‘into the 40% IRR range’.

Senior executives at The Blackstone Group said in a conference call on Thursday the firm has plans to raise infrastructure funds in the future, emphasising growing interest from its clients in the asset class.

Blackstone chairman Steve Schwarzman and chief financial officer Michael Chae said on the call that the buyout group “plans to add funds in that space,” without mentioning a timeframe for when this could happen.

The news comes after a source confirmed to Infrastructure Investor in December that Blackstone was considering ways to “expand further” into the infrastructure asset class.

In a separate Q4 earnings call, Tony James, Blackstone’s president, said infrastructure is “obviously a target of opportunity for us”.

“We’re getting a lot of interest from LPs. We’re getting a lot of encouragement from LPs to get into the business, and so it’s something we’re focused on,” James added.

He said the firm has internal employees who can make the jump to infrastructure and noted Blackstone is “talking to external people” as well. He also observed that Blackstone has so far completed around 25 to 30 infrastructure deals and invested close to $6 billion of equity in the asset class, bringing in returns that are convincing the firm to seek more exposure.

“I would say the returns are nothing short of spectacular, into the 40 percent IRR range,” he said.

Blackstone has indeed stepped up its infrastructure game over the past few years, purchasing assets including mobile towers in the US and Brazil, a natural gas export facility in Louisiana, a transmission line from New York to Quebec and a hydroelectric dam in Uganda.

Another factor that may have Blackstone eager to invest more in infrastructure is the prospect of fresh privatisations and increased government spending under President Donald Trump’s administration. Trump has promised to invest heavily in US infrastructure and has pointed to the private sector as one way to help fund his plans.

The President has floated the proposal of seeking a $1 trillion infrastructure bill from the Republican-controlled Congress, which has been matched by a similarly sized bill put forward by the Democrats.

Trump has also selected Schwarzman to serve as chair of a board that will advise the president on how to make business and government policy fruitfully intersect. Global Infrastructure Partners chairman Adebayo Ogunlesi has also been chosen to sit on the board.