Blackstone Infrastructure?
Saw that they raised a monster fund recently. Any sense for how they’re doing compared to other major infra players? How would you think about working there vs. say GIP or Stonepeak?
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Do they hire their own analysts or pull staff from other divisions?
Hire own analysts. they have an entire division called infrastructure
bump, been loving infra making it back in this forum but unfortunately I don't know enough about this.
Does this fund operate alongside Blackstone Energy Partners? Seems like some port cos could belong in both funds
No, all of the PE funds at BX operate independently of each other.
Is Blackstone considered a Tier 1 player in the space for infrastructure? If not, who are?
Not totally true.. there are instances where they make investments from multiple funds. Recent example included their flagship fund and Energy specific fund.
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Interesting. So what would you say are the pros and cons of working there, say vs GIP/MIRA/Brookfield/ECP and an Ares/Carlyle/KKR? Know their Fund I was $14bn (which is insane by itself) with plans for potentially a JV with Saudi SWF for $40bn next. Believe GIP has the biggest fund right now at $22bn with MIRA having raised the most capital in the last 5-10 years for direct investment.
AUM is great and all but track record, access to deals and execution is important. From the MFs side, in terms of quality deals, I think Blackstone and KKR are certainly top tier. Not really sold on Carlyle, Ares and Apollo (whose 'infra' funds are predominantly power-focused). KKR is growing their presence in Asia which is something that I haven't seen Blackstone really build out (based on public info).
That being said, as someone within the space, I'm fairly confident the MFs are generally not in the same conversation as Brookfield, ECP, MIRA and GIP. ECP for example has probably the most in-depth and intimate understanding of the U.S. power space out of all other investors that has allowed them to get ahead on big trends (e.g. batteries). and get exposure to these opportunities at scale (maybe the MFs have done this but certainly not from their infra funds from my understanding). Brookfield and GIP closed the biggest infra deal this year in a geography where I again haven't seen the MF infra arms do much.
Regardless, from a career standpoint, you will definitely get a tier 1 experience at MF infra arms - just make sure they cover infrastructure in all its breadth and not just conventional infra (i.e. no core+ mandate).
do you still agree with this comment? that BX / KKR infra are a tier below the traditional infra players? where would you rank i squared from a sr associate / VP experience perspective? thanks
This is a great post. What do you think about renewables these days? I work at one of the funds above and we're finding it pretty difficult to be competitive because there's so much lower cost of capital money in the space and batteries usually require a lot of power price risk with a few exceptions because of RFPs for contracts related to RPS standards.. Are you seeing similar? I would love to do more renewables, but it's hard to hit a 12% plus IRR unless you're acting as a developer and selling down.. or you create platform value and try to IPO like a YieldCo. Where do you think the space is heading for these types of players?
With renewables, its highly unlikely to find operating assets yielding above 8% IRR. Some funds have been creative here by structuring JVs (or on the funding side) and have been able to boost their returns above that. Presently, I think operating renewables in the US is a core infra play.
Prominent infra players are now more focused on getting development exposure which tends to yield above 10-11% with additional upside on sell-down (if yield compression persists). With development, the key decision is what level of risk are you comfortable with mid-to-late stage seems to the norm with early stage development providing a notable premium.
The YieldCo play is pretty much over; just look at the take-privates that happened in the space over the past 2 years - sponsors have realized that the public market hasnt been able to fully grasp the intricacies of that model and have thus not been valuing them properly.
Platform value I believe lies with developers right now esp. those with a proven track record. If they have a focus on batteries or renewable + battery buildouts, thats a plus as this space will likely pick up significantly over the next few years (imagine the growth if similar federal incentives are offered like with wind and solar).
I definitely think there's opportunities to get good exposure here if you consider the traction energy storage and hydrogen are getting.
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