Blackstone’s Tony James describes opportunities for infra investing

  • First close expected end of Q1 , initial investments to follow
  • Targets listed companies, carve-outs, expansion capital, new build
  • Infrastructure opportunity not dependent on federal legislation

Blackstone Group is targeting the end of Q1 2018 for a first close of its infrastructure fund, President Tony James said during earnings calls on Thursday. The fund will start investing shortly after that, with fundraising continuing.

Asked about potential transactions, James said Blackstone is “just beginning the institutional part of the fundraise, so we’re really not in a position to be executing.”

But he did describe the “palette” of infrastructure opportunities that the firm sees: public companies that can be taken private; assets owned by large companies that would command more value carved out; companies seeking expansion capital to build out their networks; and ultimately “new-build, high-quality assets.”

That last step will take time, James said: “The gestation period of these projects is long.”

In May, Blackstone received an initial commitment of $20 billion from Public Investment Fund of Saudi Arabia, which James called “a handshake with the Saudis. That money is premised on being matched with third-party money from our usual LPs and investors.” Documentation for the PIF investment is almost complete, and the firm has “just started [the] broader marketing effort.”

President Donald Trump, who was in Saudi Arabia when the PIF announced its planned investment, has touted a $1 trillion infrastructure package. But details have been sketchy, and last month the Washington Post reported that the administration has dropped the public-private partnership component in favor of financing by state and local governments.

Despite this continuing uncertainty, James was sanguine about the current market and regulatory conditions for infrastructure investing. He said Blackstone’s plans aren’t dependent on a federal program, and that in the past year the firm has seen around $9 billion of opportunity that would have been acted on had the fund been ready.

Action Item: Biography of Tony James:

Hamilton “Tony” James, president of Blackstone, listens to a question during the Milken Institute Global Conference in Beverly Hills, California, on May 1, 2017. Photo courtesy Reuters/Lucy Nicholson