Blackstone has $82.1 billion in dry powder for new deals

 Global alternative asset manager confirms its strong commitment to private equity and says it is continuing to grow its PE investor base

Blackstone said its private equity business invested $1.9 billion in the second quarter of 2015 with about 50 percent of that capital being deployed outside the US. It also generated $4.7 billion in realisations for its corporate private equity funds and boosted its total realisations to $13.9 billion over the last 12 months.

In its results for the second quarter of 2015, New York's Blackstone reported raising $16.7 billion in new commitments for its latest global buyout fund, including $961 million in July alone, with demand for the investment vehicle well exceeding its $17.5 billion hard cap, according to Blackstone president and chief operating officer Tony James. “This was one of the most successful fundraisings we've ever had,” he said.

In a conference call, James said the fund's executives had anticipated taking one year to raise their new private equity fund, but wound up raising it in four months after receiving strong demand from investors, including a number of international sovereign wealth funds.

While James said the firm's real estate and other alternative investment businesses have performed well, the Blackstone's COO said the firm remains as strongly committed to private equity as ever.

“Private equity is a great business, the returns continue to be spectacular and I see no change in that. Private equity is by far [Blackstone's] most active sector with almost half of the pipeline [of deals] that we need to get done being in energy; there will be a ton of opportunity,” James said.

The firm's private equity portfolio gained 3.5 percent in value over the second quarter and 16.5 percent over the last 12 months. However, income for its private equity business for the second quarter declined 74 percent to $169.4 million from $647.7 million.

Although the firm had to cut back the number of investors it allowed into its seventh buyout fund to maintain “discipline” in sticking to the fund's hard cap, James told Private Equity International that Blackstone planned to continue growing and expanding its investor base even as some pension plans moved to reduce their general partner relationships. 

Overall, Blackstone said it had amassed $82.1 billion in dry powder or un-invested available capital for investment, largely from its fundraising activities connected to its private equity and real estate funds. The firm said it invested just over half of $10.1 billion year to date across its investment platforms outside of the US.

The firm's second private equity Tactical Opportunities fund raised $1.2 billion, increasing the total assets under management for the Tactical Opportunities investment platform to $11.3 billion over the last three years. Blackstone formed the funds within its private equity business in 2012 to pursue investments outside of its traditional corporate private equity investment activities.

Blackstone, which reported overall AUM of $332.7 billion, reported a net internal rate of return for its corporate private equity investments of 16 percent through 30 June. Its private equity AUM increased 35 percent to $92 billion in the second quarter, compared with $68.2 billion from the prior year quarter; its fee earning AUM increased 16 percent to $49.5 billion compared with $42.8 billion for the second quarter of 2014.

At press time, Blackstone shares were trading at $41.63 each giving it a $25.2 billion market capitalisation.