The Blackstone Group (BX) has quietly held a $17 billion first close for its seventh global buyout fund, and already has enough commitments to reach its $17.5 billion cap. This does not yet include commitments from Blackstone employees, which typically comprise at least 1% of a private equity fund’s total capital.
Expect a final close to occur within the next six weeks or so.
What’s particularly remarkable here isn’t so much the amount of money Blackstone raised, but rather how fast it was pulled together. The firm only began formally marketing the fund last September, meaning that the entire process is likely to take around nine months. For comparison, it took Blackstone nearly four years to raise $16.2 billion for its sixth global buyout fund and around three years to raise $21.7 billion for its fifth fund.
T likely are three major factors in play. First, private equity firms like Blackstone have been among the top beneficiaries of strong public equities markets and low interest rates, allowing them to sell high and buy cheap.
Second, many large institutional investors have been culling their relationship Rolodexes, preferring to make larger investments in a smaller number of managers, with a preference for those that can offer multiple strategies (Blackstone also has major activities in real estate, hedge funds, etc.).
Finally, prospective investors had more clarity into the future leadership structure of Blackstone’s private equity business, following the mid-2012 decision to put Joe Baratta in charge.
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