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Blackstone Taking Fresh Approach to Emerging Markets

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April 2, 2014

Amid the flurry of activity we have seen around emerging markets in recent weeks and months, specifically around private equity (PE) firms looking to either avoid investing or to exit their existing investments in these markets, Blackstone Group has unveiled a new venture to help support development in these locations, according to Financial News.

 

While emerging market investments have typically been aimed at infrastructure and real estate, these are generally no longer seen as attractive. Blackstone are looking at infrastructure at a very basic level, looking to provide funding for those countries that are currently unable to meet their population’s demand for fresh water supplies. Blackstone’s focus, perhaps predictably, is on Africa, Asia, and South America.

 

However, this initiative is not your typical “clean water” crusade, but rather a focus on the technology that can be used to convert saltwater into freshwater for use as part of the overall supply.

 

One of the reasons many PE firms have exited or cooled interest in emerging markets is that they feel investments are no longer sustainable. Blackstone’s initiative will take care of one potential concern, as water is one of the most important resources in many industries, including manufacturing, and not just from a personal living perspective.

 

A Blackstone representative told Financial News that part of their reason for investing is that they felt their target locations had not been given the investment and support they need over the last decade, acknowledging that dealing with this problem will not just improve the countries as a whole, but also make them a more attractive investment proposition moving forward.

 

While it is unknown whether Blackstone have a specific figure set aside for investing, or how much they are looking to raise, a 2012 report published by the Organization for Economic Co-Operation and Development (OECD) stated that $18billion of investment would be needed annually in these markets to meet demand, with $54billion needed just to maintain existing resources.

 

Although these sums will need to come from a variety of sources, Blackstone have a history of investing significantly in such initiatives, and we can expect to see billion-dollar plus investments from them in these areas throughout 2014.

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