Blackstone Raises $8 Billion for Second Long-Life Fund

By Ted Bunker 

Blackstone Group Inc. has collected $8.2 billion for its long-hold private-equity fund, raising most of it during the initial surge of the coronavirus pandemic.

The New York firm said its Blackstone Core Equity Partners II LP fund closed to new investors at its hard cap and is roughly 70% bigger than its predecessor.

Blackstone invests its core equity funds in more durable businesses that entail less risk and holds the investments for longer periods than its flagship Blackstone Capital Partners funds, which have collected much greater sums.

Although marketing for the fund began last year, Blackstone said in a regulatory filing that as of March 10, 2020, it hadn't yet received any commitments to the new fund. The firm raised the capital despite a tightening fundraising market amid the pandemic. Data provider Preqin Ltd. has reported that the number of private-equity funds to close to new investors in the third quarter of this year fell to the lowest level since at least 2015.

The California Public Employees' Retirement System provided a big boost to Blackstone's Core Equity fund with a $1 billion commitment in March, WSJ Pro Private Equity's limited partner database shows.

At the end of last year, Calpers had about $26.1 billion invested in private equity strategies, according to a report to the pension system from Wilshire Associates. Some $2.6 billion of the system's total private-equity commitments were made to 24 Blackstone funds, according to a separate report from Meketa Investment Group.

Deals made through the firm's debut long-life fund include the acquisition of disaster-recovery company Servpro Industries Inc. and the purchase of music-rights manager Sesac Holdings Inc.

The firm collected more than $4.75 billion for its initial core equity vehicle, which closed in 2016, according to regulatory filings. The $216.3 billion New York State Common Retirement Fund, a public pension system, was one of the investors in that pool, committing $300 million, WSJ Pro data show.

Blackstone began investing from the previous fund in January 2017 and was expected to fully invest it by the start of next year.

In its 2019 annual report to the Securities and Exchange Commission, Blackstone said the Core Equity fund returned 1.6 times invested capital on realized investments, with a net internal rate of return of 37%. Including unrealized investments, the firm said the strategy had a 1.3 times multiple on invested capital and a net IRR of 15%.

Write to Ted Bunker at [e-mail]

(END) Dow Jones Newswires

October 26, 2020 19:18 ET (23:18 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.