Blackstone close to raising $5 bln for Saudi-backed fund

New York-based private equity giant Blackstone is nearing a first close of $5 billion for its infrastructure fund, backed by Saudi Arabia’s sovereign wealth fund, news agencies reported this week, citing sources familiar with the matter. 

Blackstone and the Public Investment Fund (PIF) unveiled a plan in May last year to create a $40 billion fund to invest in infrastructure projects, mainly in the US. The announcement was made during US President Donald Trump’s visit to Riyadh.

By the end of this week, Blackstone anticipates closing on about $2.5 billion in commitments from public pension funds and other institutional investors, Financial Times reported, citing people with knowledge of the transaction.

The funds will go towards investing in infrastructure projects, mostly in the US.

A similar figure will come from Saudi Arabia, as part of last year’s deal, in which the PIF pledged to match contributions from outside investors dollar for dollar up to $20 billion.

Earlier this month, Financial Times reported that Blackstone was using discounts to incentivize investors. 

The $5 billion closing this week is the first of several that executives from the New York firm are looking to complete during the first phase of fundraising. This initial effort could run until March 2019, looking to raise as much as $15 billion, including matching contributions from Saudi Arabia, a source said.

However, this figure would still fall far below the $40 billion investment plan initially announced, which would have made the investment fund twice as large as any existing one.