Blackstone’s opportunistic listed infra bets pay off handsomely – exclusive

Blackstone generated significant returns this year from two listed infrastructure bets made through its open-end Blackstone Infrastructure Partners fund, Infrastructure Investor has learned.

The firm invested $100 million into listed Spanish airports operator Aena in May 2020 and a further $300 million into an unnamed listed US utility in June 2020. The position in Aena was exited in Q1 this year, earning a 34 percent gross IRR, while the position in the US utility was exited in Q2, generating a 54 percent gross IRR, according to documents seen by Infrastructure Investor.

The capital deployed into these positions represents just under 2 percent of the overall capital deployed by BIP, which had raised about $30 billion at the end of June, including matching commitments from Saudi Arabia’s Public Investment Fund. The fund had raised $14 billion at the time the public positions were taken.

At the end of Q2 2022, BIP was generating a 17 percent return, 1 percent of which was contributed by these two listed investments, Infrastructure Investor understands. At the time of the two listed deals, BIP had agreed two investments in ports group Carrix and midstream company Tallgrass Energy, both in March 2019.

It is believed that BIP is opportunistically pursuing such public bets, and a source disclosed that about 15 percent of the fund can be made in such investments, although BIP is unlikely to reach this cap. It made a similar investment in FirstEnergy prior to its $1 billion deployment in the Ohio-based utility last November. That then translated into an ownership stake of about 5 percent and a seat on FirstEnergy’s board for Blackstone.

While the $300 million investment in the unnamed US utility was pursued with a similar intention of potentially gaining a material toehold in the company, this was eventually not taken up. The investment in Aena – which operates airports in Spain, the UK and Brazil and is majority owned by the Spanish government – is thought to have been borne out of a market dislocation opportunity rather than pursuing a material stake.

Blackstone declined to comment on the investments.

Locating dislocation

Blackstone has identified the stock markets as a fruitful destination for deals since launching its permanent capital infrastructure fund in 2017. About half of its deals to date have come either through de-listings – such as Applegreen and Signature Aviation – or investments in companies held by listed entities such as HMS Host, Invenergy Renewables and Autostrade per l’Italia. It is currently obtaining approvals for ASPI’s former parent company Atlantia, for which it has agreed a €12.7 billion take-private alongside the Benetton family.

Like Aena, deals for Atlantia, ASPI, HMS Host, Signature Aviation and Applegreen are all in the transport sector. In an interview last year, Blackstone’s European head of infrastructure Jon Kelly provided some insight into the strategy: “Covid has provided a dislocation and a disruption to the [transport] sector, offering discounts to where [these assets] would have traded had covid not occurred.”