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Bruno Alvis
Hi, I'm Bruno Alvis, Editor in Chief of Infrastructure Investor and welcome to the Infrastructure Investor Podcast. In today's episode, I welcome back Sean Klimchak, Blackstone's global Head of Infrastructure, for a special edition of the Infrastructure Investor Podcast based on a live interview Sean and I did in March during our global Summit in Berlin. On stage in Berlin, Sean and I had a wide ranging discussion. Blackstone is the world's largest investor in data centers, so a lot of our discussion focused on that, with Sean calling on industry to move beyond a do no harm standard and actively add net benefits to the communities where data centers are built. He also spoke about how the data center market will internationalize in 2026, 27, with a particular focus on Asia Pacific as a hotspot for development. Other highlights from our conversation include why Blackstone has become a major investor in US Utilities, the risks of what Sean called the private equitification of infrastructure as the asset class's boundaries expand, and why Europe is seen as a tremendous value opportunity for Blackstone.
Good afternoon and good to see you all. I hope you had a nice relaxing lunch. Sean, it's a pleasure to have you here. It's the first time we're having you on this stage, so I'm going to try and make it count.
Sean Klimchak
Good. Wonderful to be with you and everyone in the audience.
Bruno Alvis
So I think it's going on roughly a decade since Blackstone Infrastructure launched and I thought it would be a good time to take stock of a couple of decisions you made at the time, which I always found personally interesting. And one, you did an open ended strategy when most strategies in the industry are still closed ended. So looking back in these 10 years, what has that allowed you to do that maybe wasn't on offer in the market?
Sean Klimchak
Sure. So I'd say the decision, it came down to really two things. What structure and what strategy? On the structure for us, we looked at the asset class and what is needed for the asset class. This is an asset class that's at the intersection of the public and the private sectors. It's an asset class that is one where assets are not intended to be bought, fixed and flipped. These are assets that you know. For instance, a utility. We should not just simply own a utility for a temporal number of years. We also looked at it and we said we shouldn't buy the best company in an industry, hold it for five or seven years, sell it, and then buy the fifth best company. Why not just continue to invest behind the underlying sector? And then on strategy for us it really came down to ultimately, how do we generate the returns that investors will expect and what's the gap in the market. We saw at the large end of the market with a Core and Core plus strategy that there was a gap in the market. On a related note, we also felt that there would be better alignment with our investors. We thought that it was important to have that flexibility to be able to invest across both Core and Core plus, depending on the cycle, the point in the cycle. So for us, the open ended core and Core plus strategy, I think has been a differentiator and I think we found our niche in the market.
Bruno Alvis
Okay, well, I want to press you a little bit on the core Core plus side of things because it seems to me these days, and for a few years, I jump on a Blackstone earnings call and I hear John Gray basically say that the asset class is at the top of your league table. And I just put some figures out there for the audience's benefit. So last year it generated a 23.5% gross return. In 2024 it was 21% year since inception. Net return is 18%. And that's all great, but they don't sound very much like core Core plus returns. And so I'm thinking, for an outside observer might be thinking you're actually going a little bit up the risk curve. So what are you putting into your portfolio and are you actually taking more risk than cor?
Sean Klimchak
Core plus good. Well, the legal angel on my, on my shoulder will not let me talk about returns in particular, but let me just talk a little bit about what has differentiated us over time. And I think it's, it's three things. I think the first thing is we've tried to be thematic. We think the neighborhoods in which we invest matter. We have been very focused on investing behind GDP plus growing sectors, sectors that we believe have secular tailwinds, and sectors that we believe are behind some of the biggest mega trends of our era. The movement of people and goods, energy consumption and AI and digital infrastructure. So get the theme right. The second thing for us has been don't just invest in the best neighborhood, but buy the best house in the best neighborhood. Roughly 90% of what we're doing is investing behind the largest or the fastest growing company in any of these verticals. And so that's been important. But on your question about risk, my favorite investing saying is one that Steve Schwarzman has, which he says often there are no bold old people left in finance. And our strategy is one that is predicated on roughly 80% of our businesses being contracted or regulated. So if I have to put our strategy and just the broader success of the business into context, best house, best neighborhood. But ensure that at least 80 plus percent of those homes are contracted or regulated. So don't be too bold.
Bruno Alvis
Yeah, no, that's fair. I mean, one of the points that came up yesterday, and I think it was actually Scott Peake from Brookfield, he mentioned that about 50% of the investable universe wasn't around a decade ago. And we all kind of know that in this room. And I'm wondering then, what is good expansion of the asset class versus bad expansion? And what's keeping you up at night in terms of asset class risks?
Sean Klimchak
Yeah, so I look at this asset class, it's grown 9x since 2010. It's up to $1.6 trillion. Why are people investing here? I think obviously the returns are number one. But then it comes back to, as I call it, the diy, not do it yourself, but the diversification, the inflation protection and the yield. And as I look at it, what's my biggest fear for the asset class? It's the bad expansion of the asset class. It's the private, to create a word, the private equityification of this industry. Anytime we start putting the word like after any word, it usually starts not to reflect what the underlying asset class was. And so my fear is, is that we are straying too far now as we would have gone a decade ago and people wouldn't have been talking about data centers per se. But those are underlying hard assets with long term contracts, with investment grade counterparties, those types of investments. I think we can all get our arms behind when we start getting into consumer brands. And you know, I won't call out specific underlying investments, but I think we could probably all play the game of Jeopardy and come up with some of the concepts that are a bit further afield. We prefer to be a bit more provincial, stick with hard assets and concessions.
Bruno Alvis
Okay, well, you've been very bullish, you and Blackstone, on AI infrastructure and the data center opportunity at the heart of it. There's, you know, everybody in this room knows it, lots of excitement around data centers. But lately also some skepticism has been creeping up. So I want to go a little bit into some of the concerns and then we can go into some of the good stuff also. But one concern which is cropped up is the longevity of some of these data center assets given the obsolescence of some of the components in it, the, you know, the chips which the compute is A large part of the costs of it. So how do you, where do you stand here and are you concerned about the possibility of having to do expensive refurbs a few years down the line? How long will these assets last really?
Sean Klimchak
Yeah. So I look at the under and we can talk a lot about the growth and the opportunities that we see around the world in data centers. But let's just talk about the risks. I think at the end of the day, number one, I think it's important to avoid underlying tech risk. You're not, we're not out here picking which one of the underlying models are going to be successful. What we are doing is we are going and we are building the boxes that house the compute. And those boxes are actually quite versatile. Be it inference or be it training, those facilities can be pivoted and in fact we are signing triple net leases, often with counterparties for 15 to 20 years. Where we are effectively from our investor perspective, where we are not required to ultimately take a view on the re, you know, let's call it the reconfiguration of those data centers. So for us, stick with the warehouse contracted out for 15 to 20 years, double A counterparties. It's very similar to the way that we thought about the LNG market when we began to invest in that sector back in 2012. Look at your returns through the end of the contract life, ensure that those are consistent with what you would hope to earn and have the residual value be upside, not base case. I think that's been an important thing.
Bruno Alvis
Okay. Another thing I wanted to touch on is data center opposition. I think that's an emerging topic. And just to frame this and throw some figures out there, According to research firm Data center watch, some $98 billion of data center projects were blocked or delayed because of local opposition, state level pushback as of mid last year. So are you experiencing these roadblocks? What are your thoughts on this opposition?
Sean Klimchak
So I think this is probably one of the most important topics of this conference. And as the biggest investor in the world in data centers today, it's something that's top of mind. So when this was a cottage industry, fewer people cared. Now that it's a multi trillion dollar asset class, you've got a lot more focus. And I think with that enhanced focus has to come a higher standard. Hold ourselves to the standard to date has effectively been with across the industry a do no harm standard. I think we've got to actually get to the point where we are thinking about a net benefit standard. We've got to leave these communities better off with these data centers in them than without them. And so let me just walk through a few of the things as we think about it that we think are important. Number one is net additionality on power. We need to, as we call it, bring your own power instead of bring your own bottle. Bring your own power. That concept is important. And ensuring that you're actually adding net megawatts, not subtracting from the base. The second thing we think is we need to lower utility bills. We can't just leave people no worse off. Take a look at what we're doing in northern Indiana with a genco structure. With nipsco, the northern Indiana public service, we have committed as part of a build out there to number one, build more power than the local data centers will use. But also, number two, to cut utility bills by about a billion dollars or 5 to 7% for every single customer. I think that is an important standard to be upheld. The third thing is around water. We all need to be very clear about what the water usage is. For instance, within our U.S. data center portfolio, that company QTS has not used water on a new Data center since 2018. We've got to be clear about that. And when you do use water, I think we've got to be very clear about what that is. And I think we as an industry have done a relatively poor job of that. And then the last thing is there need to be community benefits. We need to invest back into the communities in which we're building these data centers. And I'll use an example again to keep the example consistent. In northern Indiana, the hyperscale are there. Amazon is committed to $185 million of benefits for the community. That $185 million is over 100% of the tax revenues of the town. It's about $6,000 of upfront payments and about $1,300 per year per resident for the life of the data center. So if we can say net additional power, we can say your utility bills are going down. We're using a modest to water. And importantly, there are community benefits. I think that's how we change the standard in the industry. And we all adhere to a net benefit standard, not just a do no harm standard.
Bruno Alvis
And a few practical examples. What does bring your own power look like? Is it behind the meter gas with or without a grid connection? Is it batteries? Is it renewables or cleaner energy? What is it looking like in practice for you?
Sean Klimchak
I think in practicality it's an all of the above. Strategy, I think it's wind and solar and batteries. The wind and the solar are still cheaper on an unsubsidized basis and they're quicker, which is obviously an important thing today. But we are going to need incremental gas generation around the world and I think that will be very important. More often than not, I think it will be grid connected versus off grid.
Bruno Alvis
Yeah, yeah, you probably don't want that acid not to have a connection. But on the power side of the equation, you've just mentioned utilities and the importance of keeping bills down. But I actually wanted to touch on another part which is you've become now one of the largest utility investors in the us. I'm guessing this is of course connected to the increased power demand that you're seeing from AI data centers. But talk us through that, talk us, what is the play there? What's attracting you to the sector?
Sean Klimchak
So number one, we think it is a good neighborhood. You take a look at the underlying utility sector. This is a sector that has beaten the S&P 500 over a 10, a 20, a 25 year period of time with 73% less volatility than the S&P 502.7 times the dividend yield. So this is an asset class that is a good neighborhood. The second thing is it's an asset class that is currently trading quite cheaply. It's trading within 20% of its 20 year PE trough relative to the S&P 500. So great neighborhood, trading quite cheaply. And then number three, the future is better than the past. We've had flat power demand, taken the US for broadly the last 20 years. Power demand is expected to be up 40% over the next decade due to AI, due to reindustrialization and electrification. So great neighborhood, trading quite cheaply. Future better than the past. That seems like a neighborhood in which we should be investing. And the societal need is there. We think there's north of $2 trillion of capital that is needed by these utilities just over the next roughly decade. Therein we think lies one of the more interesting investment opportunities of our time.
Bruno Alvis
And do you find obviously capital is a huge part of it, but this change from being flat and being used to flat demand and all of a sudden you have to grow and grow very quickly. What does that entail for you in practice? Do you find there's a mindset shift? You have to help engineer and you have to bring that to the table. How does that bit look like?
Sean Klimchak
Yeah, so I think the US has been in basically a state of permafrost for a number of years around new power generation. At least on the gas fired side, you have single projects now that are being announced that are the equivalent of all of the new gas fired generation built in the United States last year. So for us, as we look at it, yes, the industry has been caught flat footed. Yes, the industry needs to ramp up, but we are spending a lot of time trying to think about things like access to gas, access to water. We've only built one interstate new pipeline in the United States since 2018. When you think about facts like that, we're trying to think about where will that new generation need to be built. I think there are a lot of implications that we're trying to think through.
Bruno Alvis
Okay, last question on this. So Blackstone, big data center development. So you're there on the demand side, Blackstone, owner of utilities, you're there on the supply side. Do you get any kind of pushback for that? That you are owning all of these assets, some of them co dependent and I mean regulatory or political or even just headline pushback?
Sean Klimchak
Yeah. So I'd say each of our companies operate independently. It's a really important point. The utilities are operated by independent management teams. These utilities have boards and we actually don't even have the same investors across the different utilities. So I would say there's a clear separation of church and state. I would say our understanding of the grid is an important thing as we think about our broader strategies at Blackstone. But I would really think about those as being two separate glasses of water rather than being viewed as one.
Bruno Alvis
Okay, let's maybe switch gears a little bit for the remaining time. Talk about your international footprint and actually even before we get to that, let's start with data centers. Actually that's a good point. Neighborhood to start on. A lot of the conversation is about the U.S. a lot of the CapEx spend is in the U.S. but you're active globally. So how does it look like outside of the US how is the pipeline looking?
Sean Klimchak
So I would say most of the action in data centers in recent years has been within North America. But what I would say is if I had to place a wager, 2026 and 2027 will be the years of international data center build outs across the world. And so if I just use one market as an example, APAC back in 2021, US data center leasing was equivalent to APAC Data center leasing. About 1 gigawatt of leasing. US data center demand as we all know is up 13x just over the past four years. What's happened to APAC? Up only 2x. What are we seeing even just in the last 90 days? I would say that that tide has shifted. Our air trunk business has grown its least megawatts by 50% in just the last 90 days. And so when you think about that engine getting started, we are really bullish about international data center buildouts around the world. Fun fact is India, with its 1.5 billion people today has the same number of data center megawatts as Chicago, the roughly number six market in the US So we think APAC is at a point, is at its moment of lift is probably the best way to think about it. And then in Europe, we see the same underlying trends happening here. We've just signed the largest data center lease, third party data center lease in European history here in recent weeks. And I would say I see that engine starting. And so more broadly, very optimistic about data centers internationally.
Bruno Alvis
Okay, and last question, you've been here and buying in Europe and doing stuff for ages, but you've also recently launched a dedicated strategy, I think even before the Europe is back conversation sort of gained steam. So what are you trying to do here with that dedicated strategy? What is the game plan?
Sean Klimchak
Yeah, so I would just say, just broadly, without talking about funds, I would just say we think Europe is on sale. And I know that's been a little bit out of vogue to say, but when you take a look at U.S. equities, U.S. equities, depending on the week, are trading at a 60 to 65% PE premium to European equities. And we look at it and we say roughly three times the dividend yield in Europe. You take a look at renewables off 2/3. You take a look at. If I want to go buy a waste company in the US I have to pay a 60% premium. And certainly transportation assets are trading far more cheaply over here than the are over in the States. So we see a massive opportunity. That's why Steve Schwarzman last summer announced that we plan to invest over $500 billion of capital in the European economy over the next decade. We are very bullish on Europe, Sean.
Bruno Alvis
I'm afraid we're going to have to leave it there, but that's a great place to end on. Thank you very much. Great to have you here.
Sean Klimchak
Thank you.
Bruno Alvis
That again was Shawn Klimchak, Blackstone's global head of Infrastructure, in a special episode of the Infrastructure Investor Podcast, recorded live at our global summit in Berlin. To hear more of our episodes, head over to infrastructureinvestor.com podcast or you can search and subscribe to the Infrastructure Investor podcast wherever you like to listen.
The Infrastructure Investor Podcast: Blackstone—Industry Needs to Go Beyond ‘Do No Harm’ in Data Centre Development
Episode Date: May 6, 2026
Host: Bruno Alvis (PEI Group)
Guest: Sean Klimchak (Global Head of Infrastructure, Blackstone)
In this special edition, recorded live at the Infrastructure Investor Global Summit in Berlin, host Bruno Alvis interviews Sean Klimchak, Blackstone’s global head of Infrastructure. The discussion centers on Blackstone’s evolving approach to infrastructure investment, with a particular focus on data centers, the challenges and opportunities in the sector, and the need for the industry to shift from a “do no harm” to a “net benefit” mindset. Other key topics include the expansion and risks of the infrastructure asset class, Blackstone’s bullish stance on utilities in the US, and emerging international opportunities, especially in Asia-Pacific and Europe.
[01:35–03:23]
[03:23–05:34]
[05:34–07:16]
[07:16–09:25]
[09:25–12:54]
[12:54–13:30]
[13:30–15:21]
[15:21–16:28]
[16:28–17:24]
[17:24–19:29]
[19:29–20:40]
On sector focus and risk:
“Our strategy is one that is predicated on roughly 80% of our businesses being contracted or regulated. … So don't be too bold.”
[Sean Klimchak, 04:03]
On industry risk:
"My biggest fear for the asset class? It's ... the private equityification of this industry."
[Sean Klimchak, 05:57]
On community impact and raising the bar:
“We've got to leave these communities better off with these data centers in them than without them.”
[Sean Klimchak, 09:53]
On energy strategy:
"In practicality it's an all of the above. ... The wind and the solar are still cheaper ... But we are going to need incremental gas generation around the world."
[Sean Klimchak, 13:07]
On the US utility investment case:
“Great neighborhood, trading quite cheaply. Future better than the past. That seems like a neighborhood in which we should be investing.”
[Sean Klimchak, 13:59]
On international and European infrastructure opportunity:
"We think Europe is on sale. ... Steve Schwarzman last summer announced that we plan to invest over $500 billion of capital in the European economy over the next decade."
[Sean Klimchak, 19:47]
Sean Klimchak’s conversation with Bruno Alvis provides an in-depth look at Blackstone’s infrastructure playbook, revealing the firm’s cautious but conviction-driven strategy—emphasizing durable, contractually robust assets, sectoral megatrends like AI and electrification, and a new higher standard for community benefit in data center development. Looking forward, Blackstone is preparing for rapid internationalization in data centers and sees tremendous, underappreciated value in Europe, all while keeping a sharp eye on preserving the integrity of the infrastructure asset class as it grows.