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Blackstone names Sean Klimczak head of $40 bln infrastructure fund

  • Klimczak worked on power projects in Blackstone PE group
  • Fund seeded with $20 bln from Saudi; targets $40 bln
  • Fund to write checks of more than $1 bln; no sector limit

Blackstone Group named Sean Klimczak head of its $40 billion infrastructure fund, a spokesman for the firm confirmed.

Klimczak, 40, has been with Blackstone since 2005, working in the private equity group on investments including Sithe Global, Cheniere Energy Partners, Fisterra, PQ Energy, Utility One Source, Meerwing, Transmission Developers, American Petroleum Tankers and the Weather Channel.

Before Blackstone he was an associate at Madison Dearborn Partners and worked in M&A at Morgan Stanley.

The appointment was first reported by The Wall Street Journal.

Seeded by a $20 billion investment by Saudi Arabia’s Public Investment Fund, Blackstone’s infrastructure vehicle intends to raise an additional $20 billion, to target mostly U.S. projects. With leverage, its purchasing power could exceed $100 billion, Bloomberg reported.

As the largest private infrastructure fund, the vehicle will be able to write big checks. A source familiar with the fund said it would probably target transactions exceeding $1 billion, without limiting itself to any particular sector. Investments could include roads, bridges, energy, power transmission, and social infrastructure like schools and hospitals.

The source also said the fund was not contingent on a U.S. infrastructure bill becoming law. Discussion surrounding PIF’s investment began in May 2016, six months before the election.

Back then, both Donald Trump and Hillary Clinton expressed support for large-scale investment in infrastructure, which has been a rare area of bipartisan overlap. But disagreement remains over how to finance the necessary improvements. The source said Blackstone did not discuss its fund with the White House, which is advised on economic policy by Blackstone Co-Founder and CEO Stephen Schwarzman.

According to Glenn Youngkin, president and COO of Carlyle Group, the White House expects to send “principles” of an infrastructure bill to Congress “in the next few weeks.” Youngkin also told CNBC “there is strong appetite from global investors” for infrastructure, which “is long-term, it’s a steady return and it matches returns to liabilities almost better than any asset class.” State investment funds in the U.S. are very interested, Youngkin said, in addition to sovereign-wealth funds.

Last year private infrastructure funds globally raised about $63 billion across 65 funds, according to Preqin. That was up from $45 billion across 74 funds in 2015 and the highest amount since at least 2006, according to Preqin data. This year, so far 20 funds have closed on about $31.8 billion, Preqin said.

The PIF is overseen by Deputy Crown Prince Mohammed bin Salman, the Saudi defense minister and chief of the royal court, who has ambitious plans for the fund.

In April 2016 he told an interviewer, “Today, you see that many statements are being made, including statements indicating that the Saudi Sovereign Fund will be the largest fund in the world, by far. … That will be the main engine for the whole world and not only the region. There will be no investment, movement or development in any region of the world without the vote of the Saudi Sovereign Fund.”

Action Item: Check out Sean Klimczak’s LinkedIn profile:

Photo of Sean Klimczak courtesy of LinkedIn.