Blackstone and Saudi’s PIF in deal to invest

BLACKSTONE Group, the world’s biggest private equity manager, is eyeing more than $100 billion (R1.32 trillion) in infrastructure investments with a new strategy, anchored by Saudi Arabia’s Public Investment Fund (PIF).

The PIF agreed to commit $20bn to the pool, and Blackstone plans to raise the same amount from other investors, the New York-based asset manager said on Saturday. With leverage, Blackstone expects to have more than $100bn in purchasing power for infrastructure projects, primarily in the US.

The agreement between Blackstone and the PIF is a non-binding memorandum of understanding and the organisations are continuing to negotiate terms, they said.

The partnership comes as top executives, including Blackstone chief executive Steve Schwarzman and KKR’s cochief executive Henry Kravis, descended on Riyadh for the Chief Executives Forum, a weekend of deal-making.

The meetings, which had already yielded billions of dollars in deals between companies, including oil giant Saudi Aramco and General Electric, were taking place as US President Donald Trump visits the kingdom.

Infrastructure investing has gained renewed attention as Trump’s administration vows to direct more private money towards improving roads, bridges and airports. The asset class also fits the bill for liability-driven investors in the US and abroad, seeking income amid near-zero interest rates and negative yields elsewhere in fixed income.

Investment needed

“There is broad agreement that the US urgently needs to invest in its rapidly ageing infrastructure,” Blackstone president Tony James said. “This will create well-paying American jobs and will lay the foundation for stronger longterm economic growth.”

Schwarzman is a top confidante to Trump from outside the White House. After he was elected, Trump asked the Blackstone billionaire to form a group of business executives that would meet frequently with the president to discuss job creation and economic growth.

Schwarzman, 70, chairs the gatherings of the Strategic and Policy Forum.

Investor interest is fuelling ever-larger pools of capital devoted to infrastructure. Brookfield Asset Management scored $14bn last year for a pool dedicated to the strategy, which was topped in January by Global Infrastructure Partners, which closed on $15.8bn.

Blackstone signalled its ambitions for a large fund early this year.