Blackstone is aiming to have $15 billion of equity raised for its open-ended infrastructure fund by the end of this year, after pension documents published online show it’s seeking $7.5 billion of equity commitments during an “initial fundraising phase”.
The firm is seeking to raise $7.5 billion over a nine-month period, beginning with an initial close expected in March, and will be matched dollar-for-dollar by Saudi Arabia’s Public Investment Fund. Blackstone’s fundraising expectations were made public by documents from a board meeting of the Pennsylvania Public School Employee’s Retirement System, which approved a commitment of up to $500 million to the fund.
Blackstone declined to comment for this story.
Pennsylvania PSERS is one of the first known US institutional investors to commit to Blackstone’s infrastructure fundraise, with Courtland Partners acting as a consultant.
In a letter to the pension’s trustees, Courtland Partners said the amount and timing of a $500 million commitment would take advantage of a 10 percent fee break for the life of the investment and a 25 percent first-close discount for two years. The commitment increases the pension’s infrastructure exposure, which is currently below a long-term 2 percent target.
After the initial fundraising phase, Blackstone will take between three and four years to deploy the capital, according to the documents, and will then reopen to new investors.
Blackstone announced the creation of an infrastructure programme last June, drawing significant attention after stating plans to raise $40 billion over the coming years. The New York-based firm has secured a $20 billion agreement with Saudi Arabia’s Public Investment Fund as an anchor for the plan. PIF said it will match the equity Blackstone raises up to $20 billion. The pension documents said PIF will own less than 50 percent of the equity of each infrastructure investment.
Seventy percent of the fund will be invested in US infrastructure, including in core, core-plus and public-private partnerships. The amount of equity being raised means target investments will mostly top $1 billion and deal-level leverage will be in the 50 percent to 60 percent range, according to the pension documents. The papers also reveal Blackstone will offer “meaningful co-investment opportunities”.
Blackstone’s infrastructure group is led by Sean Klimczak, who since 2005 has worked on the company’s energy and power investments. Former General Electric executive Steve Bolze was hired in August to head portfolio operations and asset management. The firm has invested in infrastructure for more than 15 years and has deployed more than $7 billion in infrastructure and related investments.