Blackstone launches retail channel – Exclusive

The $368bn firm has signed an agreement with three independent broker-dealers to launch its retail investing platform.

Blackstone has entered into an agreement with three independent broker-dealers (IBD) to launch its retail investing channel, Private Equity International has learned.

The firm, which manages $368 billion in assets, signed agreements on Thursday with three IBD firms to provide real estate and hedge fund products to retail investors, according to a source familiar with the matter.

According to the source, the new channel may eventually include additional Blackstone products, including private equity, in the coming year.

Blackstone confirmed with PEI the three agreements signed Thursday.

There are three more IBD firms that Blackstone's investment committee has approved but which have yet to sign agreements, the source added, noting that the New York-based firm expects to bring the number of IBD firms to 30 for this retail channel in the next two to three years.

Blackstone's broker-dealer channel will allow retail investors to invest below the minimum commitment size required by traditional private equity products or institutional platforms.

“Our goal to provide high-quality education to the advisors in the field and deliver excellent service after the investment is made,” Blackstone senior managing director and head of multi-asset investing and external relations Joan Solotar said to PEI. “We view ourselves as true partners to our clients.”

One of the products in this channel is Blackstone Alternative Multi-Strategy Fund, a mutual fund product that Blackstone launched in 2013 for its retail channel that has returned 8 percent in the past 12 months.

Blackstone has already attracted capital from retail investors through major banks and brokerages for the past five years. This broker-dealer platform is an additional channel to attract retail investors of all sizes.

During the firm's first-quarter earnings call on Thursday, Blackstone president and chief operating officer Tony James said the firm is selling about $9 billion per year through its retail and small institutions channels.

“The big growth area for Blackstone is going to be right there,” he said, adding that the firm is managing demand to create controlled growth.

The launch follows a PEI report in January that Blackstone wanted to launch products for family offices and retail high-net-worth investors to access the firm's various products.

Blackstone is the only private equity firm that has built the capacity to offer retail products across asset classes through multiple channels such as the IBD. 

For the first quarter of 2017, Blackstone generated an economic net income of $986 million, or 82 cents per common share, up 166 percent from the same quarter in 2016, it said on Thursdsay.

In private equity, the firm's assets under management rose 4 percent from the same quarter last year, to $99.7 billion.