Blackstone has reopened fundraising for its flagship perpetual capital vehicle Blackstone Infrastructure Partners after investing more than 80 percent of the $14 billion it initially raised in 2019, Jon Gray, the firm’s president, said during Thursday’s Q3 earnings call.
The reopening comes at a time of booming perpetual capital inflows, which accounted for nearly half of the $148 billion in inflows the firm took over the last 12 months – $47 billion in the third quarter alone. Perpetual AUM increased 70 percent year-on-year to nearly $200 billion across 16 unique vehicles, according to Gray.
The scaling of perpetual strategies “is transforming the firm’s earnings profile” with its compounding effect, according to chief financial officer Michael Chae. The approach primarily involves management fees that benefit from accelerating inflows and appreciation in net asset value. He added that fee-related performance revenues crystallise on a recurring schedule without asset sales.
Given the “vast” opportunity set in infrastructure, Gray said Blackstone expects this business to grow “significantly” over time. In Infrastructure Investor‘s September Deep Dive on Blackstone’s infrastructure business, Gray explained how large he expects the asset to be for the firm.
“If you ask me specifically on infrastructure, do I think, over time, this could be a $100 billion business for us? Yes, I think it could be because the asset class is so large and we’re still in the early days of it,” he said.
Gray also touched on another theme discussed in Infrastructure Investor‘s Deep Dive during the Q3 earnings call: green investments. “I would expect the next vintages of our energy equity and energy debt funds will be heavily oriented toward the [energy] transition, toward sustainability. I think investors will react well. And I think similarly, we’ll do more in infrastructure, another way investors can play it with us at Blackstone,” Gray told analysts.
Earlier in 2021, Gray told Infrastructure Investor: “If you asked me what would I like to do more of, I would like to do more ‘green’ investment. I think the biggest challenge is deploying capital in the green space because there is so much investor capital.”
BIP global head Sean Klimczak added at the time that he was “highly confident that over the next 12 to 18 months you’ll see us take steps to become a meaningful investor in the sector”.
To date, BIP is invested across sectors that include transportation, midstream and digital infrastructure.
Blackstone’s overall AUM increased 25 percent year-on-year to an industry record of $731 billion, chief executive Stephen Schwarzman reported on the earnings call.
Michael Baruch contributed to this story