Saudi wealth fund to back $40bn Blackstone infrastructure vehicle
Venture predates Trump visit and will focus on upgrading ageing US support systems
The sovereign wealth fund of Saudi Arabia has unveiled plans to place $20bn with Blackstone, the alternative asset manager, becoming the anchor investor in a new $40bn infrastructure fund that will focus on mainly upgrading US assets.
The two sides announced the non-binding memorandum on Saturday, just hours after US president Donald Trump landed in Riyadh for his first foreign visit since inauguration.
However, both Saudi’s Public Investment Fund and Blackstone stated that the terms were not yet finalised and emphasised that the agreement was the culmination of talks that predated the US president’s election.
Stephen Schwarzman, chief executive of Blackstone, who also heads Mr Trump’s economic advisory group, has actively been courting the Saudis for sometime, said one person with knowledge of the deal, who added: “With the Saudis, the negotiation never ends.”
Under the arrangement, the PIF will become a passive investor in the new vehicle, while Blackstone will seek to raise at least $20bn from other potential investors.
“Overall, through the equity in this vehicle and additional debt financing, Blackstone expects to invest in more than $100 billion of infrastructure projects, principally in the United States,” the two groups said in a joint statement.
The investment with Blackstone marks the second major backing of a foreign money manager in less than year by the PIF, which is undergoing a dramatic transformation under the leadership of the powerful deputy crown prince Mohammed bin Salman.
Also this weekend, the PIF finalised its plans to commit $45bn to a new $90bn technology investment fund to be managed by SoftBank, the Japanese tech-to-telecom conglomerate led by its billionaire Masayoshi Son.
Yasir Al Rumayyan, the PIF’s managing director, said: “This potential investment reflects our positive views around the ambitious infrastructure initiatives being undertaken in the United States as announced by President Trump, and the strategic opportunity for the Public Investment Fund to achieve long-term returns given historical investment shortfalls.
Hamilton James, Blackstone president, said: “There is broad agreement that the US urgently needs to invest in its rapidly ageing infrastructure. This will create well-paying American jobs and will lay the foundation for stronger long-term economic growth.”
The announcement is one on several deals being unveiled, with dozens of US business leaders in Saudi Arabia at the same time as President Trump.
PIF was advised by M. Klein and Company, an advisory firm founded by former Citigroup dealmaker Michael Klein.