First Round: Extra credit

Inspired by the prestigious Rhodes Scholarship programme, Stephen Schwarzman’s eponymous scholarship was launched in 2013 and now supports 200 students from around the world annually for a one-year Master’s degree at Tsinghua University in Beijing to “educate future leaders about China”.

First Round didn’t initially notice a link between the programme and private equity – apart from the name above the door. For not only did Schwarzman’s $100 million gift endow the programme, it went towards the construction of The Stephen A Schwarzman building, recently featured in Architectural Digest as one of the world’s best new university buildings. Its layout, says that august organ, is modelled on the Oxford and Cambridge campuses and courtyard houses popular in China.

The benefactor also launched a fundraising campaign for $200 million for the Schwarzman Endowment Fund in 2013, run by the Tsinghua University Education Foundation.

First Round enjoys a good dig through a filing, and thanks to Blackstone’s 10-K lodged with the US Securities and Exchange Commission in 2016, the role the firm will play in this endeavour has become clearer.

The target for the endowment fund was upped to $450 million and the TUEF will delegate its management to Blackstone. Neither the foundation nor entities affiliated with it will be required to pay Blackstone a management fee. Naturally the endowment will invest in the firm’s funds.

As the mega-firm noted in filings, “to the extent Blackstone allocates and invests assets of the Schwarzman Endowment Fund in our investment funds, we anticipate that such investments will be subject to reduced or waived management fees and/or carried interest”.

The firm is by no means desperate for investors, as our PEI 300 attests, but just to be sure it’s created a new one of its very own.