Private equity giant Blackstone plans to raise a massive $150 billion in its next fundraising cycle, beginning this quarter with the rollout of a ninth flagship buyout offering.
“We’re now moving into a new flagship fundraising cycle,” president and COO Jonathan Gray said in Blackstone’s fourth quarter and year-end 2021 investor call. “Over the next 18 months, we expect to have launched and substantially complete fundraising for nearly all of the firm’s major draw-down strategies.”
In all, 17 fund products targeting about $150 billion in aggregate will be brought to market, Gray said, “reflecting a 25 percent increase over the prior cycle”.
These include the latest vehicles for Blackstone’s two largest flagship strategies, corporate private equity and global real estate, both of which are starting up fundraising in Q1 2022. Targets were not disclosed.
Blackstone Capital Partners IX is expected to be the firm’s largest buyout fund ever. It could seek as much as $30 billion, Bloomberg reported, which if reached would make it 15 percent larger than its predecessor, which closed in 2019.
The firm’s existing global real estate fund, Blackstone Real Estate Partners IX, also wrapped up three years ago, securing $20.5 billion.
Blackstone’s third-largest flagship strategy, secondaries, is presently in the market with its ninth vehicle. Blackstone Strategic Partners Fund IX collected $12.8 billion in the fourth quarter, against an original target of $13.5 billion. It is now on track to raise roughly $20 billion, Gray said.
A secondaries-focused GP continuation strategy, distinct from Fund IX, is among the offerings in the fundraising pipeline, as is real estate and infrastructure secondaries. Others are BAAM’s GP stakes and seeding strategies, clean energy credit, European credit, growth equity, life sciences, PE energy, real estate Asia, real estate credit, real estate Europe and tactical opportunities.
Underlying Blackstone’s ambitious fundraising plan is a conviction that the alternative assets space will continue to grow, backed by ever-larger pledges of LP capital. A measure of this growth is the multiplication of GP strategies and a dizzying array of new fund products.
“Today we offer nearly 60 investment strategies, up from 35 five years ago,” Steve Schwarzman, Blackstone’s chairman and CEO, said in the investor call. “We have the deepest menu of available products with compelling performance across our platform and the largest flow of investment activity in the world.”
As a result, Schwarzman said, “our customers are constantly in our store and our shelves are full”, providing Blackstone with “a huge percentage of repeat business”.
LPs, hungry for more choice and customisation, tend to welcome GP expansions into fresh areas. Schwarzman highlighted the point by referencing this month’s launch of a new Blackstone sustainable resources credit platform that aims to invest an estimated $100 billion in energy transition solutions over the next decade.
On the other hand, in a market characterised by proliferating vehicles, as well as a higher velocity of fundraising, LPs are perhaps also concerned about how to manage the size and scope of their exposure.
Blackstone accounted for $270 billion-plus in capital inflows in the past year, much of it through fundraising. This increased assets managed by the firm to more than $880 billion, up 42 percent year over year. Assets managed are expected to hit the $1 trillion mark in 2022, Schwarzman said.