Blackstone to close Green Credit III above $7bn, values transition portfolio at $20bn

Blackstone has valued its energy transition portfolio at more than $20bn, having previously announced plans to deploy $100bn over the decade.

Blackstone is planning to close its energy transition credit fund above its $7 billion target imminently. President Jon Gray said on the firm’s Q2 results call: “We expect to complete raising our green energy credit vehicle in a few weeks at over seven billion dollars.”

Blackstone is also raising Energy Transition Partners IV, a buyout fund, “which we expect will be probably $4 billion plus”, said Michael Chae, chief financial officer.

The firm has valued its energy transition portfolio across all strategies at more than $20 billion. This does not include dry powder from recent commitments to its energy transition funds, according to the firm. Blackstone has announced plans to invest $100 billion in energy and climate change solutions over the decade from 2022.

“This has been one of our busiest areas in BIP [Blackstone Infrastructure Partners] and also our dedicated energy transition private equity, and credit funds,” said Gray. “The first two largest commitments in the second quarter were a stake in a major utility to support its transition from significant coal power generation to zero percent in five years and additional growth capital for our portfolio company InvEnergy, the nation’s largest private renewables developer. We believe the need for scale capital and expertise in this area will only increase over time.”

Chae added: “Energy transition is a meaningful chunk of our $37 billion infrastructure business. It’s probably a third of that capital, but probably the fastest growing.”

Blackstone’s energy transition portfolio “can be a lot bigger”, said Chae. “The size of the market is growing so quickly and investor desire for exposure to this is growing as well… The investors wanted it, [and] it can be very large, very scalable. And… the IRA in the US has made a big difference,” he added, referring to the Inflation Reduction Act, which will go into effect in August.