Blackstone MOU with Saudi's PIF kickstarts move towards $100bn of infrastructure investments

Blackstone, Saudi's PIF plan $40 billion infrastructure investment fund

The private equity firm, Blackstone Group L.P. (NYSE: BX) made gains upwards of 7% and a $39.11B market cap after news of the firm's $40B infrastructure investment with the Public Investment Fund ("PIF") of Saudi Arabia.

The agreement between Blackstone and Saudi's PIF is a non-binding memorandum of understanding, as the two sides continue to negotiate the details of the deal.

The Saudi Public Investment Fund [PIF] will contribute $20 billion to the new vehicle, while the remaining US$20 billion will be raised from "other investors", Blackstone said in a statement without providing details on the timeframe.

The partnership comes as top executives, including Blackstone CEO Steve Schwarzman, descended on Riyadh for the inaugural Saudi-US CEO Forum, a weekend of dealmaking.

Across its investment strategies, infrastructure investing has been one of Blackstone's most successful and active areas. General Electric also announced that the firm sealed a deal for $15 billion worth of projects. With assets of $368.2 billion as of March 31, it manages almost twice as much as its closest competitor, Apollo Global Management LLC, and each of Blackstone's four platforms-real estate, private-equity, hedge funds and credit-are among the largest investing businesses of their kind.

"This will create well-paying American jobs and will lay the foundation for stronger long-term economic growth", Blackstone president Hamilton James said.

A policy change announced in 2015 led to the development of a new strategy and mandate, which is meant to help Saudi Arabia diversify its economy. Blackstone and PIF are still negotiating terms of the arrangement.

Investor interest is fueling ever-larger pools of capital devoted to infrastructure.

H.E. Yasir Al Rumayyan, Managing Director of the Public Investment Fund of the Kingdom of Saudi Arabia, said: "The Public Investment Fund's worldwide investment strategy is built upon establishing strong global partnerships and identifying opportunities to maximize sustainable returns for the people of Saudi Arabia". "There's a lot of financing, but no revenues". Airports are a key area of focus for providers of private capital, according to Glenn Youngkin, the president of Carlyle Group LP, which is raising money for a global infrastructure fund.

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