Blackstone's Baratta eyes infra vehicle of up to $40bn

The firm’s private equity head argued in an interview with Bloomberg TV that an infrastructure fund needs to be able to deploy billions of dollars at once 'to be relevant' in today’s market.

The Blackstone Group's private equity chief Joe Baratta said the firm is thinking big for its future infrastructure strategy, suggesting in a television interview it would target a vehicle of up to $40 billion.

Speaking with Bloomberg TV on Tuesday, Baratta said the US infrastructure market is at an “inflection moment”, with bipartisan political support for more investments and private capital waiting to be deployed.

“To be relevant in that end of the market, I think you need to be deploying billions of dollars at a time, not hundreds of millions. So you're probably talking about a vehicle that's 20, 30, 40 billion dollars of equity,” he said.

When asked if that means aiming for the largest vehicle ever raised, Baratta added: “Correct. That would be the ambition if this comes to fruition, which we certainly think it will, in terms of the public sector aligning with the private sector to invest in the fabric of this country, which is necessary.”

The fundraise he is alluding to would not only eclipse the recently closed largest infrastructure fund ever raised, GIP's $15.8 billion third fund, it would also dwarf Blackstone's first try at raising an infrastructure vehicle, a $2 billion attempt in 2009 that ultimately led to a spin-out group in 2011 called Stonepeak Infrastructure Partners.

Blackstone did not respond to a request for comment for this story.

For months, details have been emerging about the New York-based private equity firm's growing interest in the asset class. A source confirmed to Infrastructure Investor in December that Blackstone is planning to “expand further” into infrastructure.

Last week in a conference call, Blackstone chairman Steve Schwarzman and chief financial officer Michal Chae said the group “plans to add funds in that space“, without mentioning a time frame for when this could happen.

There has been excitement in the investment community about US infrastructure stemming from the attention it received from politicians during last year's election. President Donald Trump 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.

GIP's record-breaking fundraise came after Brookfield Asset Management closed its own mega-fund, Brookfield Infrastructure Fund III, at $14 billion last July.