The Blackstone Group has closed on roughly $8 billion for Blackstone Capital Partners VI to date, president and chief operating officer Tony “Hamilton” James said today in an investor call. The firm will begin investing the fund in late 2009 or early 2010.
Fund VI last year lowered its initial $20 billion target to between $15 billion and $20 billion.
The fund’s predecessor closed on $21.7 billion in 2006 and has roughly $5 billion in uncommitted capital remaining. Approximately $1.1 billion in limited partner capital was deployed during the fourth quarter.
Geographically, James said that US was the most interesting region to date, followed by parts of Asia, while Europe was the least interesting investment destination. The firm said however it was too early to predict the bottom of the market, therefore there was a “heavy focus” on medium-sized buyouts, credit-related investments, financing for corporations that want to “go do things” but can’t access capital markets and corporate partnership activity.
Blackstone’s private equity practice reported negative fourth quarter revenues of $193.6 million and a loss of $286.2 million for 2008. The loss compares to annual gains of $821.3 in 2007. The loss was driven primarily by depreciation in the fair value of the funds’ portfolio investments.
“The markdowns are disappointing but do not necessarily represent permanent loss of value,” chief executive Stephen Schwarzman said during the call. He stressed that Blackstone began exiting cyclical investments in 2006 in favor of more defensive sectors and that, while not recession proof, Blackstone significantly re-oriented itself to non-cyclical investments.
Schwarzman added that 60 percent of Blackstone’s portfolio companies have no covenants and 90 percent of their debt matures in 2012 or later providing them several years to ride out the economic downturn.