The Blackstone Group raised $670 million in the first quarter of the year for Blackstone Core Equity Partners (BCEP), its longer-term private equity fund targeting $5 billion.
The fund, which has yet to make any investments, will certainly close beyond that amount, Blackstone president and chief operating officer Tony James said on the firm's first quarter earnings conference call on Thursday.
The firm plans to invest the fund in a shorter time frame than a more traditional private equity fund, and to return faster to market to raise additional money for the fund. “It will continue to scale assets under management,” he said.
He also explained that Blackstone is marketing the fund only to a certain type of investors.
“This product was not offer broadly,” James said. “It was offered very selectively to sophisticated investors and I think we've got a very good response.”
James said that the firm marketed BCEP to large family offices, particularly in Europe, “who think in terms of decades in their ownership.” It has also attracted investors such as large pension plans that have a long-term view and want to match their longer liability positions. “This sort of strategy has been appealing to them,” he said.
He compared BCEP to Blackstone core real estate fund, which holds properties longer than its other real estate funds. As the holding period is longer than a traditional private equity fund, the risk profile is lower but management fees will be more recurring as well.
Several of Blackstone's competitors are also raising longer-term private equity funds to invest in more established businesses. Carlyle had secured $3 billion for its Carlyle Global Partners as of February when it released its fourth-quarter earnings.