Cash-rich sovereign wealth funds are major participants in the capital-intensive ecosystem of unlisted infrastructure. On his first foreign trip since inauguration day, U.S. President Donald J. Trump is making rounds in the Middle East, starting off in Riyadh. Despite political headaches in Washington D.C. egged on by major T.V. reporters, Trump is keen on having a revitalization effort on crumbling U.S. infrastructure, especially in the areas of airports, roads and bridges. Revealed in the mix of presidential prowess and Saudi royalty, Saudi Arabia’s Public Investment Fund (PIF) plans to commit US$ 20 billion to be an anchor investor in a new US$ 40 billion infrastructure fund to be managed by The Blackstone Group LP, the world’s biggest private equity manager. The infrastructure fund will target rehabilitating and upgrading U.S. infrastructure and support systems. The fund also plans to use debt financing, thus having a potential warchest to invest in US$ 100 billion worth of infrastructure projects primarily in the United States. The Blackstone Group is having Sean Klimczak, a senior managing director at the firm, to run the elephantine infrastructure fund. He has been with Blackstone since 2005. Klimczak had initiated talks with Saudi government officials in April 2016 about a potential infrastructure fund with an unlimited fund term life.
Blackstone Chief Executive Officer Stephen A. Schwarzman and KKR & Co. co-CEO Henry Kravis are also in Riyadh attending the inaugural Saudi-U.S. CEO Forum. Blackstone and PIF, just prior to Trump landing in Riyadh, had signed a non-binding Memorandum of Understanding (MoU). The terms are being finalized. Saudi’s PIF was financially advised by M. Klein and Company, an advisory firm founded by former Citigroup investment banker executive Michael Klein.
Yasir Al Rumayyan, Managing Director of PIF commented in the release that, “The Public Investment Fund’s international investment strategy is built upon establishing strong global partnerships and identifying opportunities to maximize sustainable returns for the people of Saudi Arabia. We look forward to partnering with Blackstone, a recognized leader with a strong record of achievement across its extensive infrastructure projects. 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.”
Blackstone Group President Hamilton James in a release stated, “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.”
Cutting Mega Checks
PIF also completed the motions to commit US$ 45 billion to the SoftBank Vision Fund, a massive US$ 90 billion technology investment fund overseen by Japan-based Softbank Group.
Other private equity giants getting into the U.S. infrastructure game with the Trump backdrop are The Carlyle Group, KKR, Oaktree Capital Group LLC and Brookfield Asset Management.
Private equity firm BC Partners hired Goldman Sachs Group Inc. and JPMorgan Chase & Co. to advise on the sales of Acuris. Acuris is a collection of financial news and data sites, which includes Mergermarket, Dealreporter, and Debtwire. In 2017, BC Partners sold around a 30% stake in GIC Private Limited.
Before the rebranding to Acuris, Mergermarket was part of The Financial Times Group until 2013 when it was sold off to BC Partners.
Aflac Inc. is an American insurance company founded in 1955. The company is the biggest provider of supplemental insurance in the United States. Aflac also has major operations in Japan.
In December 2018, Japan Post Holdings (JPHLF) signaled it was spending US$ 2.64 billion for a 7-8 % stake in Aflac. The goal is that, in four years time, Aflac will become an affiliate of Japan Post. Japan Post hopes to accomplish this by becoming the largest voting shareholder of the company. The world’s 13th largest company, with 400,000 employees, Japan Post needs to expand to chase further growth, mainly because Japan Post expects the postal business to decline. Diversification is seen as the optimal route to long term stability for the holding company. Japan’s economy is worrying. Japan’s aging population means that many insurance companies are facing a shrinking customer base, Japan Post settled on a plan to expand overseas.
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The Russian Direct Investment Fund (RDIF) and the Development Agency of Serbia, also known as Razvojna agencija Srbije, reached an agreement to work together to identify attractive investment projects to strengthen bilateral economic ties and increase investment flows between Russia and Serbia. Russian capital and businesses are keen on investing in Serbia.
In addition, the two countries signed an agreement to cooperate on civil nuclear energy, according to state-owned Russian reactor builder Rosatom (Rosatom State Nuclear Energy Corporation). Rosatom continues to expand it business of nuclear cooperation deals in a wide number of countries.
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