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US Blackstone Group raises record $6.45bn private equity fund

US private equity firm The Blackstone Group has announced the final close of its latest fund at a record-breaking $6.45bn. The news provides some optimism that investors are at least still prepared to commit to proven performers.

The fund, Blackstone Capital Partners IV, was launched in spring 2001 with a target of $5bn but was able to secure substantially more from both existing investors and a large number of first-timers.

The firm attributed its fundraising success to its long track record, a strong team, its focus on investing in proven management teams, and its strategy of investing alongside major global corporations wherever possible. Corporate partnerships make up more than 50 per cent of its total investments.

There has been a lot of concern in private equity markets on both sides of the Atlantic about the ability of funds to put their substantial capital to work productively, but Blackstone President and CEO Stephen A Schwarzman said the conditions were ripe for investment.

‘The prospects for investing the fund are particularly opportune given the global dislocation of stock markets and the need for corporations to raise capital by selling assets. The new deal pipeline is beginning to flow again, and at significantly more realistic valuations compared to the last several years.

‘We have always been value-oriented investors, an approach which we believe will continue to serve our investors well, particularly at this stage in the cycle when the global economies rebound from recession,' he said.

The new fund brings the total amount of funds raised by Blackstone for corporate private equity to more than $14bn. Its last fund, Blackstone Capital Partners III, closed with commitments of around $4bn in 1997. The firm also invests in real estate, corporate debt, and marketable alternative asset management.

Although it is clearly encouraging to see such a giant fund closed in the present conditions, it would be dangerous to extrapolate too much from its success. Brand- name funds that escaped getting their fingers burnt in the heat of the tech bubble have been able to attract plenty of investment in recent months but many others have found the market much less forgiving.

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