A topic near and dear.
From Bloomberg, March 7:
Alternative investors want in on infrastructure
Welcome to Going Private, Bloomberg’s twice-weekly newsletter about private markets and the forces moving capital away from the public eye. Today, we look at an infrastructure billionaire, an unlikely alliance between banks and direct lenders and the allure of junk. If you’re not already on our list, sign up here. Have feedback? Email us at goingprivate@bloomberg.net — Erin Fuchs
Picks and Shovels
At Bloomberg Invest this week, DigitalBridge CEO Marc Ganzi answered a fundamental question: What is digital infrastructure?
He defined it as the “picks and the shovels and essential plumbing to what makes AI cloud computing and mobility work.”
Investing in essential plumbing — digital and otherwise — is making billions for private-market investors.
One such billionaire is Mike Dorrell, who sensed an opportunity in infrastructure investing back in 2007 and pitched the idea to Blackstone, my colleague Tom Maloney wrote.
Dorrell and his partner flailed for three years before leaving Blackstone to start their own firm, Stonepeak Partners, which specializes in infrastructure investing and manages around $72 billion.
Dorrell has come a long way since being thwarted by the 2008 financial crisis: The Bloomberg Billionaires Index has valued his wealth for the first time, putting it at $9 billion.
Dorrell paid $150 million last year for Palm Beach’s Tarpon Island. Photographer: Felix Mizioznikov/Shutterstock
Stonepeak’s Dorrell, 51, isn’t the only infrastructure investor to get rich lately.
This is arguably the golden age of infrastructure, to borrow a cliché from private credit. Thanks in part to the AI boom, demand growth for power in the US is projected to at least quintuple over the next three to five years, JPMorgan’s global head of alternative investments, Jay Serpe, wrote earlier this year.
“This infrastructure bottleneck is unprecedented,” he wrote.
With President Donald Trump’s promised budget cuts, the US needs private capital now more than ever to build the roads, bridges and airports required to keep the country going. The entire globe needs infrastructure cash too, as countries race to meet their own energy needs and the basic plumbing — the roads, airports, highways and railroads — they need to prosper.
Asset managers are getting ready to pounce on the demand.
BlackRock — the world’s largest asset manager — bought Global Infrastructure Partners last year for a mere $12.5 billion as part of its trifecta of private-investing acquisitions.
Now GIP is close to raising about $25 billion for its latest flagship fund, a sum that would make it one of the industry’s largest, my colleagues Dinesh Nair and Silla Brush reported this week.
Blackstone, the world’s largest manager of alternative assets, made its own infrastructure play this week, our colleague Immanual John Milton reports. The firm said its credit and insurance arm is buying a minority stake in transportation infrastructure firm ITE Management and is snapping up as much as $2 billion of investments from it.
Even KKR — a firm once viewed by some as a barbarian that bought up firms, larded them with debt and sold them off — is investing in infrastructure for the long haul. Co-CEO Joe Bae said at Bloomberg Invest that the firm plans to expand its long-term ownership unit to include investments in infrastructure, as my colleague Allison McNeely reported....
....MUCH MORE
We happened to catch Mr. Dorrell's purchase of his island home in May 2024's "Financial Conditions Still Appear Quite Loose". Along with some interesting charts from the St. Louis Fed's FRED database we used the purchase to bolster the headline's veracity:
Loose policy can also be ascertained anecdotally—Barron's Penta, this morning, May 22:
Private Island off Palm Beach, Florida, Sells for $152 Million
This Florida private island has just sold.
...MUCH MORE
We first looked at this bit of property in December 2023's:
For Sale: Single Family Home, Upper Bracket
Palm Beach Florida
Possibly also of interest, the 2024 infrastructure series:
February 23 = The Infrastructure Theme Is For Real (PWR)
January 31:"KKR raises $6.4 bln for its Asian infrastructure fund" (KKR)
January 8 "East
Coast land continues to collapse at a worrying rate It's steadily
sinking or subsiding, which is destabilizing levees, roads, and
airports."
January 8: "There’s a Shortage of Electrical Wires, Transformers. That’s Good for These Stocks."
January 12: (Big) Batteries: "‘World leading' Tesla battery online to help kick coal out of Hawaii" (TSLA)
January 12: BlackRock Goes Large-by-Large In Infrastructure (BLK)"
January 15: "Investors look set to pour cash into infrastructure following BlackRock acquisition" (BLK)
January 16: "BlackRock Acquisition Triples Its Business of Building Airports, Roads, and Utilities"
I'm
telling ya, this is a big deal. Not just for the $12.5 billion purchase
price but for the $100+ billion in assets that GIP manages.
January 23: Minerals-for-Infrastructure: "Congo and China Talking $7 Billion In Finance, Tshisekedi Says"
January 23: DEI and ESG Live On, We Just Won't Talk About Them (BLK)
That's one lesson from BlackRock's purchase of Global Infrastructure Partners.
January 29: RAND: "The U.S. Must Close the Long-Distance Power Transmission Gap with China" Or, as the Financial Times put it, a bit more succinctly, February 1, 2024:
KKR has raised a record $6.4bn for its latest Asian infrastructure fund, capping a month of frenzied investment activity in the sector at a time when broader private equity fundraising has slowed.
—KKR raises record $6.4bn for Asia fund in infrastructure rush
Related, December 4, 2023:
Russell Napier Called It: "The Eyepopping Factory Construction Boom in the US"
And possibly most important:
March 18 - In Nvidia's World, If You (and your company) Don't Have Money You Will Not Be Able To Compete (NVDA)
