Blackstone Group’s shares surged to their highest point in nearly two years on news that Saudi Arabia has committed $20 billion to a new infrastructure investing business the firm is launching.
Blackstone said Saturday that the business will center on a permanent capital fund with a broad mandate to invest in and build infrastructure, particularly in the U.S. The New York firm is aiming to raise $40 billion of equity to give it spending power of up to $100 billion once debt is added.
The $20 billion commitment from Saudi Arabia’s Public Investment Fund is only the beginning for Blackstone. The firm will solicit other big investors for the remaining half of the $40 billion fund. Still, the potential fee bonanza associated with such a large pool of cash has analysts re-evaluating their forecasts for the world’s largest private-equity firm.
Citigroup Inc. said it now expects Blackstone shares to reach $40, up from its prior prediction of $32. The size of the infrastructure business will give Blackstone a fifth leg to stand on–along with existing real-estate, private-equity, hedge-fund and credit businesses–and shows how it continues to find new ways to grow when many other asset managers have been flat, Citi analysts wrote in a note to clients.
Credit Suisse Group AG is even more bullish, bumping its price forecast to $45, from $42. “We expect Blackstone to pull some of its best talent across its businesses (mostly from private equity and energy) to build-out this new silo,” the bank said.
JMP Group Inc. analysts said they’re waiting to learn more about the fund’s fee structure before revisiting the firm’s $38 price forecast, but that the news “serves as a reminder of Blackstone’s ability to evolve and innovate, supporting a strong growth outlook that we believe is sometimes underappreciated.”
Many investors aren’t waiting for details. Blackstone shares rose 6.7% on Monday, to $31.88. That climb puts the shares at their highest price since August 2015 and adds more than $466 million to the net worth of Blackstone co-founder and Chief Executive Stephen Schwarzman.
May 23, 2017 at 01:48AM
from Ryan Dezember
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