Blackstone Group raised $1.3bn to create a private equity investment fund for wealthy individuals. This is a sign of renewed momentum in the company’s efforts to expand beyond institutions like pension funds.
Blackstone Private Equity Strategies Fund (BXPE) raised the largest amount of money ever by a retail vehicle. Blackstone had to limit withdrawals of a $67bn fund similar to this one just over a decade ago.
Blackstone is the largest alternative asset manager in the world, with assets of $1tn under management. BXPE will offer corporate buyouts to individual investors, which is the core of Blackstone. This fund represents the culmination in a decade of efforts by Stephen Schwarzman, Jonathan Gray and others to find new investment sources.
Competitors like Apollo Global, KKR Carlyle Group, and Brookfield all have similar funds designed for wealthy individual investors. Large private equity groups have become more interested in the market as institutions with excess exposure to unlisted investment refrain from investing in new funds.
BXPE is Blackstone’s new fund aimed at individuals. It will be the first fund Blackstone has launched since Breit, its previous fund, was heavily redeemed. This shook Blackstone’s efforts to attract cash from wealthy investors. Blackstone began accepting commitments for BXPE back in November, and had received subscriptions totaling $1.3bn as of early January. The fundraising campaign will continue.
Blackstone attracted over $100bn of investment in its retail property funds and credit funds that it sold to individuals investors. It also built a team of hundreds of marketing and sales employees to deal with their tens and thousands of investors. The company created the Blackstone University, which provides educational materials for investors and their advisers.
Blackstone has seen its profits and assets grow in recent years thanks to cash from wealthy investors. Retail funds were a problem for Blackstone in 2022 when the New York firm was forced to limit withdrawals due to fears about commercial property values.
reported in late 2022, that Blackstone delayed its plans to launch the BXPE Fund due to redemption requests from Breit. Blackstone relaunched its BXPE fund-raising effort in November, believing that redemptions were stabilised and that investor demand was high.
BXPE charges a fee of 1.25 percent of assets, and 12.5% of the performance fee if you exceed a return of 5 percent per year.
Investors must accept a limited right to liquidation in order to avoid the danger of asset fire sales. BXPE investors can only withdraw a total of 3 percent of assets before the limits kick in. This is less than Breit’s 5 percent. Blackstone declined comment.
Blackstone’s fund will be the most complex yet. It will combine private equity strategies, including those that target biotechnology companies and traditional buyouts, with preferred equity investments. BXPE does not pay a dividend, unlike Breit which pays a large portion of its return to investors through regular distributions.
The prospectus of BXPE warns that “the valuations for BXPE’s assets could differ from the liquidation values which may be realized if BXPE was forced to sell assets.”