by Cameron Nicol, Senior Marketing Manager – eVestment Private Markets
As one of the original and largest players in the alternative assets space, the power, prowess and reach of Blackstone has never come into question. Yet, it has perhaps never been quite as ubiquitous in the industry as within recent weeks, and the title, King of Capital, has perhaps never been more fitting to describe the firm’s leadership.
Blackstone’s Record-Breaking Streak
Sealing a record $18.7bn private real estate deal in June 2019 was just the beginning of a number of large-scale announcements for Blackstone. On September 11th, Blackstone formally announced a final close on the industry’s largest ever Real Estate fund, and now the firm has been only topped by itself, raising the largest ever Private Equity fund. The $26 billion fund, Blackstone Capital Partners VIII, has now overtaken Apollo’s $24.6 billion raise in 2017. Blackstone’s record deals and fundraises alone fail to mention the transformation from a publicly traded partnership to a C corporation to widen the management company’s investor base.
In general, these notable achievements are highly representative of the pent up demand for exposure to private funds by institutional investors, especially considering even the world’s largest private equity fundraise closed above target. The fund set out to raise $20-25 billion, according to a document by MassPRIM, available within the eVestment Private Markets platform.
Who Backed the Largest Private Equity Fund Ever…
One of the groups fuelling record private fundraising activity globally is public pension plans. The majority of public pension plans have been shifting allocations in recent years, increasing their exposure to private markets to capitalize on record performance and close funding gaps: a 2019 study of 102 U.S. public plans by eVestment reported that as of March 2019, 70 were under allocated to their Private Markets allocations, including by more than $19 billion to private equity strategies alone.
The opportunity to invest in Blackstone’s latest flagship Private Equity fund was no less attractive to this group, either: more than $4.5 billion of commitments were reported by U.S. public plans to Blackstone Capital Partners VIII, according to data from eVestment Private Markets.
Hover on the chart to see which public plans reported commitments, and to what extent, to now the world’s largest private equity fund.
As part of the eVestment Private Markets platform, users gain access to underlying documents and content presented as part of investment recommendations by public plans and their consultants. This gives unique insight into the key drivers of an LP’s decision to, or not to, invest.
Apart from the obvious benefits of a leading brand name and long-standing partnerships, what were some of the messages and attributes of Blackstone’s latest offering that won over investors?
“Attractive performance across prior funds with a strong focus on capital preservation.”
“All of Blackstone’s funds are in the first or second quartiles in Private Equity industry peer performance rankings.”
“Consistent net performance across prior funds and through prior volatile market condition, and strong capital preservation demonstrated through attractive dispersion of returns.”
2. Deal Flow
“… a reputation as a steward of businesses has made Blackstone a trustworthy an credible ‘partner of choice’ for target companies which leads to attractive and proprietary deal flow.”
“Deep expertise in multiple industries and firm reputation provides access to highly sought-after businesses,”
3. Operational Expertise
“Employs an operationally intensive value creation model for each of its portfolio companies, leveraging the Portfolio Operations Group.”
“A robust Portfolio Operations Group, led by former CEO of Nielsen and Vice Chairman of GE Dave Calhoun, is a key driver of investment performance.”
“…it’s network of Senior Advisors who help inform investment decisions and aim to enhance value post-investment.”