Blackstone has raised $1.3 billion as the first private equity fund for wealthy individuals, achieving one of the largest initial capitals of its kind for a fund despite a delayed launch.
The cash pile, revealed in Monday's filing, highlights the growing competition among alternative investment firms to capture private wealth as major sources of institutional funding dry up. There is.
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The fund, called BXPE, will invest in private strategies such as startups, fund investments and buyouts that Blackstone CEO Steve Schwarzman is famous for.
BXPE's structure has a different reach than some of other companies' consumer products, President John Gray told Wall Street analysts last year. It is targeted at people with at least $5 million in investment capital.
“The world is a little more limited,” Gray said when announcing the fund on an earnings call in October. “But I would say it’s still very large.”
Blackstone is pushing to expand the $1 trillion company's funding sources beyond large institutions. The company is competing with companies such as KKR & Co. Inc. and Apollo Global Management Inc. to capture the world's so-called mini-millionaires. Across private equity, this class of investors, the world's wealthy suburbanites, could supplement flattened investments from endowments, pensions, and other institutions.
The industry's proposals challenge conventional wisdom that financial advisors and individuals should only look for stocks, bonds, and index funds. Private equity's pitch: Investors stand to make huge profits and are willing to pay higher fees if they give up some ability to cash out.
This assumption will be tested as private equity moves into downstream markets and attracts greater scrutiny.
launch delay
Blackstone, which was an early entrant into marketing funds for high net worth individuals and is now the largest, began designing the Blackstone Private Equity Strategies Fund about six years ago, and plans to deliver the Blackstone Private Equity Strategies Fund by early 2023. I was planning to establish one.
But then the market changed direction and investors began to worry about tying up their money. Blackstone delayed the launch of BXPE and took a closer look at how the fund would be structured.
The company was facing another challenge. Blackstone's real estate fund was forced to limit redemptions in late 2022 as cash demands soared as investors became nervous about the real estate market.
Blackstone Real Estate Income Trust has since shown signs of declining balances, with withdrawal requests in December down 80% from their peak in January 2023. The company said BREIT has outperformed its public competitors since its inception. Still, the article was an attention-grabbing reminder that when markets turn, individuals run for the exits.
Blackstone's private equity funds will continue to provide liquidity to investors within limits.
Investors can withdraw up to 3% of the fund's net asset value each quarter. If you cash out two years in advance, you'll be giving up some of the value of your stock.
BXPE doesn't charge traditional buyout fund fees of 2% of assets and 20% of profits, but it is more expensive than many traditional stock funds. BXPE investors will pay 1.25% of the net asset value and 12.5% of the total profit as long as the 5% return is earned.
The fund accepts money on an ongoing basis, has no deadline for releasing stakes, and aims to earn up to tens of billions of dollars.
