Public Investment Fund, Riyadh, Saudi Arabia, signed a memorandum of understanding with Blackstone Group that will see the sovereign wealth fund commit $20 billion to a new infrastructure strategy, said the two entities in a joint news release.
PIF, which has $183 billion in assets according to the Sovereign Wealth Fund Institute, will be the anchor for the new strategy, which Blackstone anticipates will have $40 billion in total equity commitments. The memorandum is non-binding and the parties will continue their negotiation to agreed definitive documentation, said the release.
Through the equity commitments and additional debt financing, Blackstone expects to invest more than $100 billion in infrastructure projects, primarily in the U.S. The strategy is a new business for Blackstone with PIF as a strategic partner — the culmination of a year's discussion between the two parties, added the release.
“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,” said Yasir Al Rumayyan, managing director of the PIF, in the release. “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.”
U.S. infrastructure is graded D+ by the American Society of Civil Engineers, and “the deteriorated state of its infrastructure is estimated to cost each American family $3,400 per year,” said the release. The country's infrastructure funding gap is estimated at up to $2 trillion.
Spokesmen at PIF could not be reached for comment.