Blackstone execs tout perpetual platforms, hint at ‘category killer’ in 2020
January 30, 2020 | Jake Mooney | S&P Global Market Intelligence
The Blackstone Group Inc. hopes to raise nearly $100 billion in capital in 2020, driven in part by growth in perpetual capital platforms including Blackstone Real Estate Income Trust Inc. and a direct-lending business development company, executives said.
Blackstone raised roughly $26 billion from retail investors in 2019, with the nontraded real estate investment trust serving as a hub of retail fundraising, and the firm is working to expand the network of financial advisers marketing its retail platforms internationally, Joan Solotar, head of private wealth solutions, said in an earnings conference call. Solotar added that Blackstone is also planning the global launch of a “category-killing product” targeting retail investors by the end of 2020, declining to provide further details.
2019 marked the third year in a row the private equity giant secured more than $100 billion in inflows, and the firm’s leaders said they expect 2020 totals to approach that level, even after the 2019 close of fundraising for Blackstone’s $26 billion eighth flagship fund.
Blackstone expects to complete fundraising in 2020 for a life science fund, a fourth real estate debt fund, a second European direct lending fund and a third infrastructure secondaries fund, and expects a “significant” first close in the next few months for its second core private equity vehicle, CFO Michael Chae said. But beyond traditional drawdown funds, in which the firm raises finite pools of money and then spends them, executives emphasized recent growth in perpetual vehicles, which they said are transforming Blackstone’s asset base and producing steadier earnings.
At year-end, assets under management for perpetual funds rose 43% year over year to $104 billion, and the funds’ growth drove Blackstone’s fee-related earnings to record levels for both the fourth quarter and 2019, President and COO Jonathan Gray said.
Gray highlighted nontraded REIT Blackstone Real Estate Income Trust, noting that it generated $2.8 billion of inflows in the fourth quarter of 2019 and tripled its assets under management year over year to roughly $13 billion. The platform’s growth helped swell the firm’s broader core-plus real estate business to $46 billion, a 31% year-over-year gain. In January, the REIT agreed to form a joint venture with MGM Growth Properties LLC to acquire the real estate assets of two Las Vegas casinos for $4.6 billion.
The perpetual vehicles also include the credit BDC and the firm’s $14 billion infrastructure fund. The vehicles generally set lower return targets than Blackstone’s opportunistic funds, with no mandatory return of capital, and management fees and performance revenues calculated on net asset value.
Source: S&P Global Market Intelligence
