BLACKSTONE is betting individuals will turn the firm into a bigger force in roads, ports and data centres.
Blackstone Raises Over $1 Billion for New Infrastructure Fund
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.
A Shift from Private Equity to Individual Investors
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.
Race to Manage Individual Wealth
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.
Infrastructure Investment: A Growing Trend
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.
Risks and Fees Associated with the Fund
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.
Fees and Charges
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.
Conclusion
Blackstone’s move to raise funds from individual investors marks a significant shift in the industry. As the sector continues to grow, it will be interesting to see how Blackstone and other firms adapt to the changing landscape.
FAQs
Q: What is Blackstone’s new infrastructure fund called?
A: The fund is called BXINFRA.
Q: How much did Blackstone raise for the fund?
A: The firm raised over $1 billion for the fund.
Q: Who can invest in the fund?
A: The fund is open to wealthy individuals.
Q: What kind of investments will the fund make?
A: The fund will invest in roads, ports, and data centers.
Q: Are there any risks associated with the fund?
A: Yes, there are risks associated with investing in infrastructure, including the difficulty of valuing and selling big projects.
