Blackstone : Is Buying Alaska Permanent Fund Infrastructure Assets -- Update

By Ted Bunker and Preeti Singh

Blackstone Group Inc. agreed to acquire a nearly $1 billion infrastructure investment portfolio from Alaska Permanent Fund Corp., according to a person familiar with the matter. The person said Blackstone signed the deal a few weeks ago.

Jon Gray, Blackstone's president and chief operating officer, said during an earnings call Thursday that the firm's Strategic Partners unit had made a large secondary deal involving infrastructure assets.

"Several weeks ago, [Strategic Partners] acquired $1 billion in infrastructure secondary interests, which we believe is the largest-ever transaction in the sector," Mr. Gray said on the call. He didn't elaborate or identify the seller.

The transaction was easily the biggest secondary deal involving infrastructure assets this year through June, a new survey suggests.

The aggregate value of infrastructure secondary deals came to $1.44 billion this year through June, according to the survey from secondary intermediary Setter Capital. The advisory firm that specializes in secondary transactions said deals involving infrastructure investments provided a bright spot in the market during the first half of the year, as the effects of the coronavirus pandemic hobbled transactions in most other sectors.

While infrastructure secondary deals declined more than 4% in this year's first half compared with the same period in 2019, total secondary transactions plunged about 56% to $20.2 billion, including $17.46 billion involving private-equity funds, Setter said. PE deals fell more than 58% during the half.

The survey showed that sovereign funds accounted for just 6.7% of all secondary transactions. Setter said responses from survey participants suggest that infrastructure secondary deals will total about $4.15 billion this year.

The first-half total value of all secondary deals dropped from the $46 billion recorded in the first six months of last year, Setter said. It projected all secondary deals would total $58.3 billion this year, including $50.26 billion in private-equity deals. In 2019, the value of all secondary transactions reached $85.41 billion, Setter said.

The Alaska fund initially sought to sell private-equity assets as well, but the buyer wanted to adjust the price following the March market drop and those interests were pulled out of the deal, the person said. The terms of the infrastructure portion didn't change, the person added. It is unclear who the prospective buyer for the private-equity assets was.

The value of the Blackstone deal approached $1 billion when unfunded commitments were included, the person said.

Mr. Gray said the $1 billion deal came as Blackstone's Strategic Partners raised a new $3.8 billion infrastructure-focused secondaries fund as well as one targeting real estate. By the end of June, the unit had almost $40 billion in assets under management, he said.

Write to Ted Bunker at [e-mail] and Preeti Singh at [e-mail]