Blackstone Aims Beyond 'Mass Affluent' With Infrastructure Fund

To be exempt from federal rules for mutual funds, these conglomerates invest primarily in private operating companies, meaning they directly own actual businesses and hard assets, such as toll roads and airports.

Blackstone, in contrast, will only raise money from accredited investors who are also qualified purchasers, according to the regulatory filing, a category roughly defined as people having at least $5 million of investments.

While this may narrow the potential pool of investors, it provides the fund with more flexibility than the conglomerates in regard to the types of assets that it can hold.

Blackstone Infrastructure Strategies will not only invest in private infrastructure projects and companies, but it will also provide structured-debt financing to the sector and acquire interests in infrastructure funds run by third-party managers and the firm itself.

In addition, BXINFRA will deploy as much as 20% of its net assets in debt securities, publicly traded equities, loans and derivatives, which, among other things, can be more easily cashed in when the fund needs money to buy back shares from exiting investors.

The new fund will charge an annual management fee of 1.25% and take 12.5% of total returns, with the profit allocation kicking in after the fund has generated a 5% annual gain.

While the fund’s shares won’t be publicly traded, it will offer to buy back as much as 3% of its units after each quarter ends, according to the filing.