Blackstone moves into infrastructure

The private equity giant is teaming up with Citigroup to invest $5bn in Indian infrastructure.

The Blackstone Group will team up with Citigroup and India's Infrastructure Development Finance Company to form a $5 billion (€3.8 billion) fund for Indian infrastructure investment, according to a press release from India's finance ministry.

At press time, Blackstone had not released a statement on the agreement.

According to the Ministry of Finance statement, Citigroup and Blackstone will initially commit $250 million to the fund and raise the remainder from both Indian and foreign institutional investors. State-owned India Infrastructure is also expected to contribute to the fund.

The $5 billion vehicle will be comprised of $2 billion in equity with the balance in debt. The fund will target investments in the ground transportation, energy and airport sectors.

“This initiative is an important milestone in our search for innovative solutions to meet the vast challenge of financing the development of India's burgeoning infrastructure sector,” Palaniappan Chidambaram, India's finance minister, said in the statement.

Chidambaram has been a vocal proponent of increased infrastructure investment in India, saying it will help drive economic growth and reduce poverty in the country.

Blackstone opened an office in Mumbai in 2005, now led by Akhil Gupta, the former chief executive for corporate development at Reliance Industries and Reliance Infocomm. At the time, the firm announced plans to invest $1 billion in the country.

In December, the private equity real estate arm of Citigroup, Citigroup Property Advisors, closed on CPI Capital Partners Europe, a €1.2 billion vehicle focused on real estate and property-related assets on the Continent. According to the firm, Citigroup Property Advisors also raised €1.4 billion for an Asian real estate fund.

The Citigroup-Blackstone joint venture comes as interest in infrastructure picks up amid fever-pitch interest in the Indian property sector. Last year, The Carlyle Group launched in infrastructure investment platform, while JPMorgan is reportedly in the market with an infrastructure vehicle hoping to raise as much as $1 billion. A number of other investors are focused on the Indian infrastructure market including AMP Capital, IDFC and IL&FS, among others.