BLACKSTONE is betting individuals will turn the firm into a bigger force in roads, ports and data centres.
The alternative asset manager gathered more than US$1 billion for a new infrastructure fund for wealthy individuals, one of the largest initial hauls for such a vehicle.
The fundraising, disclosed in a filing on Wednesday (Jan 8), is another sign that Blackstone is moving further from its roots as a private equity firm backed by institutional investors such as pensions and endowments.
Blackstone now oversees about a fifth of its US$1.1 trillion of assets for individuals and banks’ wealth clients, underscoring how the industry is making inroads to manage the fortunes of dentists, lawyers and other mini-millionaire professionals. Their US$80 trillion pool of wealth has sparked a race among Carlyle Group, KKR, Apollo Global Management and others to be bigger household names.
Firms once known as buyout cowboys are rethinking their brands. An industry known for secrecy is being forced to become more accessible to regular people and financial advisers – and break through the view that stocks and bonds are the main way to amass wealth.
Greg Blank, who leads digital infrastructure at Blackstone, is chief executive officer of its new infrastructure fund, known as BXINFRA. It’s the latest fund the firm has built for individuals. The largest, Blackstone Real Estate Income Trust, has faced plateauing growth as investors remain downbeat on property markets.
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Infrastructure – a sprawling category that includes bridges, railroads and data centres – can imbue investors with a sense of ownership in the economy that more esoteric financial strategies do not.
Meanwhile, the sector stands to get a boost from incoming president Donald Trump, who has said he would fast-track approvals and permits for large infrastructure investors.
But big projects are also hard to value and sell. That’s a risk for individuals when they need their money back in a pinch.
Blackstone has structured its fund so that investors can withdraw as much as 3 per cent of the fund’s net asset value each quarter. The fund reserves the option to decide otherwise, and individuals may not always get their money when they want it.
While it does not cost as much as typical private equity funds, BXINFRA is pricier than a mutual fund. It will charge an annual management fee of 1.25 per cent and take 12.5 per cent of total returns, with the profit allocation kicking in after the fund has generated a 5 per cent annual gain. BLOOMBERG
