Blackstone Announces $40bn Infrastructure Fund With Saudi Arabia

Against the background of U.S President Donald Trump making his first overseas visit to Saudi Arabia, Blackstone Group, a major private equity firm has announced the launch of a $40 billion fund that will invest into infrastructure projects in United States with Saudi Arabia.

Blackstone signed a non-binding memorandum of understanding to that effect with the Public Investment Fund (PIF) Saudi’s main sovereign wealth fund this week which will be finalized after further negotiations. Blackstone’s founder Stephen Schwarzman is the head of Trump's business council.

Although the agreement was announced as a part of Trump’s recent visit, the deal has been in the works for over a year according to the companies. One of Trump’s key electoral promises was making significant investments into infrastructural projects within the United States.

RT

A joint statement released by the company stated that Blackstone will commit $40 billion in equity while the PIF will put in $20 billion as an anchor investment. The rest would come from other investors. Blackstone expects to raise $100 million through a mix of debt and equity financing.

In a statement, Hamilton E. James Blackstone president said

There is broad agreement that the United States urgently needs to invest in its rapidly aging infrastructure. This will create well-paying American jobs and will lay the foundation for stronger long-term economic growth. Blackstone has the talent, scale and experience to be an effective private sector partner in filling the massive infrastructure funding gap

According to the statement, the infrastructure funding gap for the United States was nearly $2trillion currently indicating the need for substantial domestic and international investments.

A major player in sectors like real estate, credit investments and hedge funds, Blackstone is seeking to increase its presence in infrastructure with this deal. Several firms have spotted an opportunity in the under-invested infrastructure industry in the U.S. and also globally.

BlackRock, Global Infrastructure Partners, and Macquarie are some of the firms that have made large investments in the sector.

H.E. Yasir Al Rumayyan, managing director of PIF, said that the investment of $20 billion by Saudi Arabia was an indication of the country’s confidence in President Trump’s agenda, adding that it reflected the U.S. administration’s focus on infrastructure initiatives. Rumayyan further said the PIF hoped to achieve long-term returns from the new investment fund. The latest fund would push Blackstone’s total assets under management to more than $400 billion, a four times increase over what it was during its 2007 IPO.

Chad Simmons

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