The government of Saudi Arabia pledged $20 billion to Blackstone's newly created infrastructure investment vehicle with the ultimate aim of raising another $20 billion from other investments and ultimately bring the total to $100 billion.
Hope For Infrastructure?
While this may be an encouraging development to kick-start a much needed program of repairing roads, bridges and other infrastructure projects, the capital raise is a positive for Blackstone's equity investors.
Credit Suisse's Craig Siegenthaler maintains an Outperform rating on Blackstone's stock with a price target raised from $42 to $45 after the announcement. According to the analyst, Blackstone could raise another $40 billion of additional capital for infrastructure investments by the end of 2018 and the infrastructure business will add up to 10 cents of incremental Fee Related Earnings by 2020.
The analyst is also estimating that the infrastructure unit will generate around $0.20 of carry/year on average when its assets under management reaches just $40 billion.
Bottom line, to date, the largest infrastructure fund ever created was Global Infrastructure Partners' $15.8 billion initiative. However, Blackstone's fund would likely be at least three times the size or more and will target gross returns in the 10 to 15 percent range with one-third of returns derived in the form of capital return.
At last check, shares of Blackstone were up 6.83 percent at $31.91.
Related Links:Mario Gabelli's Game Plan To Profit From An Infrastructure Bill
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.