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Blackstone to seek more than US$20b for buyout fund
[BOSTON] Blackstone Group LP plans to start raising its next global private equity fund three years after gathering about US$18 billion from investors for its last pool.
The firm is expected to seek more than US$20 billion when it starts marketing its eighth buyout fund later this year, according to people familiar with the matter who asked not to be named. New York-based Blackstone's prior vehicle wasn't even a third invested as of March 31, according to a regulatory filing.
The buyout firm is quickly returning to market as investors pile into the asset class. High demand from yield-hungry clients helped firms take in a record US$453 billion last year. The industry now faces the challenge of deploying more than a record US$1 trillion in a market where prices on deals are reaching new highs, according to data provider Preqin.
Buyout deal value rose 90 per cent in the first quarter compared with the same period last year, according to Preqin, as some big mergers contributed to the increase.
A spokeswoman for Blackstone declined to comment.
Last year, KKR & Co, Silver Lake and Advent International all completed multibillion-dollar capital raises. Apollo Global Management LLC gathered a record US$24.7 billion for the largest fund ever raised by a buyout firm.
Co-founded by chief executive officer Stephen Schwarzman, Blackstone is also nearing a first close of about US$3 billion for its third energy fund, according to people with knowledge of the matter. Blackstone Energy Partners III will be able to start actively investing shortly after closing the round, said the people. The fund is targeting about US$4.5 billion, which is the same size as its 2015 predecessor, they said.
Blackstone, which started its private equity business in 1987, raised US$21.7 billion - its largest buyout fund - at the height of the boom in 2007. Following the financial crisis, it took the firm almost four years to gather US$16 billion for a successor fund. It then completed fundraising for a slightly larger US$18 billion pool at the end of 2015.
The firm's last two funds were producing net internal rates of return of 14 per cent and 15 per cent respectively as of March 31, according to a regulatory filing.