The fund’s perpetual, or open-ended, structure is designed to match the lifespan of infrastructure assets, meaning it won’t be forced to sell to realize profits within a set timetable. Targeting an annualized return after fees of 10 percent, its areas of focus include assets such as ports, waste facilities and telecommunications towers.
Blackstone has firmed up its senior infrastructure ranks, promoting internally and hiring from rival investors such as EIG Global Energy Partners and OMERS Infrastructure as well as from General Electric Co. It’s still searching for mid-level investment professionals, according to people with knowledge of its staffing needs.
Round Two
The firm’s second foray into infrastructure is already more successful than its first. It tried raising at least $2 billion after the global financial crisis, but eventually allowed that team to spin out in 2011 to form Stonepeak Infrastructure Partners, which is in the final stages of raising as much as $7.2 billion for its third fund. Blackstone may be catching up to KKR & Co., which recently held a first close of $6 billion on its third infrastructure fund. Another rival, Carlyle Group LP, is raising a $2.5 billion infrastructure fund while the senior partner anointed to lead Apollo Global Management LLC’s efforts in the sector is leaving the firm.
For now, Blackstone remains in the shadows of the industry’s biggest players, Global Infrastructure Partners, Brookfield Asset Management Inc. and IFM Investors. The next funds being raised by GIP and Brookfield may each reach or top $20 billion, while IFM’s open-ended global infrastructure fund managed $23.1 billion as of May 31.
Besides competition from other funds, Blackstone could find itself facing off against longtime infrastructure investors such as Canada Pension Plan Investment Board, which had C$28.6 billion ($21.5 billion) in the sector as of March 31.
The fund, which intends to allow its investors to contribute additional cash into certain large deals, is yet to put any of its capital to work but has been actively pursuing opportunities including a stake in APM Terminals -- a ports business owned by Danish shipping company AP Moller-Maersk A/S -- and a 49.99 percent holding in mobile transmission towers owned by Altice Europe NV, according to people familiar with the matter.
KKR triumphed in the auction for the Altice French towers in a deal announced last week while APM Terminals has since decided not to sell a stake, people with knowledge of the matter said. Thomas Boyd, an APM Terminals spokesman, declined to comment.
Despite assurances from executives such as James, who in February said he was “very confident” Blackstone’s infrastructure fund would reach $40 billion in the long term, it’s not guaranteed that the infrastructure unit will be able to replicate the growth of its real estate arm, which had a deeper track record before it launched its open-ended effort. That fund, known as Blackstone Property Partners, had $1.4 billion under management as of March 2014. By the same date in 2018, that figure had grown to $27.2 billion.
This article was provided by Bloomberg News.