News & Analysis

Strategic Partners poised to break record with $20bn for Fund IX

Fund IX has benefited from the strong performance of private equity pushing many LPs close to their allocation limits, COO Jon Gray said on an earnings call.

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Blackstone is expecting to shatter the record for the largest secondaries fund ever raised.

Speaking on the asset manager’s third-quarter earnings call, chief operating officer Jon Gray said that Strategic Partners Fund IX is on track to reach “approximately $20 billion”, having held an $8 billion interim close a few weeks ago.

The fund will begin investing this quarter, he added.

The record for largest secondaries fund is currently shared by Ardian’s ASF VIII and Lexington Capital Partners IX, which both raised $14 billion and closed in 2020, according to Secondaries Investor data.

Strategic Partners Fund IX came to market in April targeting $13.5 billion, Secondaries Investor reported. Among its limited partners is Cathay Life Insurance, which committed $600 million. The firm is also in market with a fund dedicated to GP-led deals.

“I’d say the one headwind on fundraising [broadly] is that private equity has been such a strong sector that investors are in some cases over-allocated,” Gray said. “I think that will be very bullish for our secondaries business.”

Strategic Partners’ 2019-vintage, $11.1 billion Fund VIII produced a net internal rate of return of 57 percent and a multiple of 1.7x as of 30 September, according to a results presentation. The secondaries portfolio as a whole grew 17 percent quarter on quarter and 53 percent year on year.

Strategic Partners is run by senior managing director Verdun Perry.

Blackstone’s real estate secondaries fund has passed the 50 percent deployment mark and is among a group of funds that has been deployed more quickly than planned, Gray said. Strategic Partners Real Estate VII closed in July on $1.9 billion.

The listed asset manager increased its assets under management by 25 percent to $731 billion, doubled its distributable earnings to $1.6 billion and grew fee-related earnings by 30 percent, all year on year.

“Today, Blackstone reported the best results in our 36-year history,” said chief executive officer Steve Schwarzman.