Strategic Partners nears $20bn close on biggest-ever secondaries fund

Blackstone has inched closer to meeting its ambitious cross-platform fundraising goal – including for its latest secondaries fund – despite mounting headwinds for GPs of all types and sizes.

“With the support of our LPs, we are progressing toward our $150 billion target, with more than half achieved at this point,” president and COO Jonathan Gray said in a third-quarter 2022 earnings call last week.

Capital inflows between July and September totalled $45 billion, bringing the tally so far this year to $183 billion. Over the past 12 months, inflows rose to $338 billion.

Thanks to this robust activity, fundraising is “largely completed” for two of Blackstone’s top three flagship vehicles, Gray said.

They include the firm’s latest secondaries offering. Blackstone Strategic Partners IX hit $17.2 billion in the third quarter, putting it within reach of a $20 billion target. The fund, which got underway with a $13.5 billion target, would at $20 billion be the market’s biggest pool ever.

Blackstone is also near to wrapping up a new real estate offering. Rolled out with a target of just over $30 billion, Blackstone Real Estate Partners X now stands at $26.5 billion.

A large chunk of the $45 billion gathered in the third quarter – $14.5 billion – went into the private equity strategy. This despite the fact that fundraising challenges are mostly focused on this asset class.

In the earnings call, Gray acknowledged “it’s harder out there,” something he believes will continue “until markets get better.” However, he said, Blackstone’s ability to raise $183 billion since January, “60 percent higher than our previous best,” reflects its “differentiated spot” in the industry.

Another factor working in Blackstone’s favour is the scope and diversity of its global LP base, chairman and chief executive Steve Schwarzman said.

“Starting from our first fund in 1987, we have had a very significant component of non-US investors,” he said. This foreign source of capital provides a “terrific balance” at a time when US institutions are cash-constrained.

Assets managed by the firm totalled $951 billion at the end of September, up 30 percent from a year earlier. Blackstone has repeatedly stated that its assets are likely to approach or exceed $1 trillion this year.