- Fund offers LPs first-close discount, expected in Q2
- Saudi fund to match commitments up to $20 bln
- Infra fund could grow to $40 bln over a decade
New Mexico State Investment Council plans to commit up to $100 million to Blackstone Group’s infrastructure fund, spokesman Charles Wollmann told Buyouts in an email. The Council approved the commitment at its April 24 meeting.
The $23.7 billion sovereign wealth fund’s $100 million allocation might be eligible for a first-close discount the firm offered to early investors in Blackstone Infrastructure Partners, an open-ended vehicle that could grow to $40 billion over the next decade.
Blackstone was offering a 25 percent fee discount to LPs who participate in the first close, due diligence documents released this year by Pennsylvania Public School Employees’ Retirement System show. Larger commitments might be subject to a 10 percent discount over the life of the commitment, though it’s unclear how large of a commitment merits the discount.
Jon Gray, who was named Blackstone’s president and chief operating officer earlier this year, said the firm expected to hold a first close this quarter with subsequent closes over the course of the year.
“I can’t comment further on specific numbers, given we’re in the middle of fundraising, but investor response has been positive so far, with broad interest from pension funds, sovereign-wealth funds, and others, both domestically and outside the U.S.,” Gray said on a recent earnings call.
Public Investment Fund of Saudi Arabia, the fund’s largest investor, in 2017 agreed to commit up to $20 billion to Blackstone’s infrastructure effort.
Saudi Arabia’s committed capital will be invested through a parallel fund that will match whatever capital Blackstone raises through other LPs, according to Pennsylvania documents.
Pennsylvania’s public-school retirement system committed up to $500 million to the fund at its Jan. 18 meeting. Louisiana Parochial Employees’ Retirement System allocated up to $75 million in March.
Blackstone is expected to invest the fund across a wide range of infrastructure-related assets, including energy-distribution channels, airports and cellular-phone towers.
A Townsend Group memo included in New Mexico’s meeting materials reported Blackstone will typically use the fund in larger deals, deploying upward of $1 billion of equity per deal.
The investment team is led by Sean Klimczak with Senior Managing Directors Wallace Henderson, Sebastien Sherman and Greg Blank.
Steve Bolze, the former head of General Electric’s $28 billion power business, joined the firm as a senior managing director last year and will lead the fund’s portfolio operations unit.
The team also includes Managing Directors Matt Runkle, Phillip Solomond and Tia Breakley as well as Principal Ravi Purohit, according to a fund presentation.
While the $40 billion fund represents Blackstone’s first dedicated infrastructure vehicle with its current infrastructure team, the firm over the years invested more than $7 billion in infrastructure-related deals across its real estate, PE and debt funds.
Those investments grossed a 39 percent internal rate of return and 2.2x multiple on invested capital as of Dec. 31, 2017, a fund presentation released by New Mexico says.
Blackstone declined comment.
Action Item: To see the firm’s fund presentation, visit https://bit.ly/2KbM8Ps
Stephen A. Schwarzman, chairman and CEO of Blackstone, looks on during an interview with Maria Bartiromo, on her Fox Business Network show “Opening Bell with Maria Bartiromo” in New York. Reuters/Brendan McDermid