Blackstone’s long-term equity fund makes first investment

Blackstone Core Equity Partners, which has at least a 15-year investment time horizon, saw an attractive opportunity in a music licensing and royalty company.

Blackstone's first long-term private equity fund, Blackstone Core Equity Partners (BCEP), has made its first investment, the firm said in a statement.

The firm began raising BCEP in early 2016 to be flexible in its investment holding periods, which traditionally last three to five years in private equity. It has marketed an investment period of at least 15 years, a source familiar with the matter told Private Equity International .

The fund, which held an interim close of BCEP on $2.58 billion in June , is targeting $5 billion but anticipated to close above that figure.

Core Equity acquired music rights organisation SESAC Holdings from technology, media and telecommunications-focused private investment firm Rizvi Traverse Management for an undisclosed amount, according to a statement from the firm on Wednesday.

Rizvi initially invested in SESAC in 2012, according to Rizvi's website .

The source added that Blackstone approached the owner on an exclusive basis, where no auction process occurred. The transaction is expected to close in the first quarter of 2017.

“Blackstone is acquiring our company with the specific intent of backing the existing management team,” SESAC chairman and chief executive officer John Josephson said in the statement.

SESAC is a Nashville, Tennessee-based organisation that represents songwriters and collects royalties for them every time their songs are played or performed.

Although the music industry has been tough in the last decade, the rockiness was mostly on the artists' – not the songwriters' – side, the source said.

Licensing rights and collecting royalties are a derivative of music consumption, which hasn't weakened and provides a stable and predictable way to invest in the music market. Therefore, Blackstone found SESAC compelling to its long-term BCEP approach, according to the source.

BCEP is expected to wrap up above its $5 billion target, as Blackstone president and chief operating officer Tony James had said in the firm's first-quarter earnings call last year. He also had noted that the firm is marketing BCEP selectively, to investors such as large family offices and pension plans that have a long-term view.

The source said BCEP does not yet have a second investment on the horizon.

Blackstone and SESAC declined to comment, and Rizvi did not respond to requests for comment.