Side Letter: Blackstone’s $26bn, infrastructure’s daring decade, South Carolina ups co-investments

They've done it: the world's largest private equity firm has raised the world's largest private equity fund. Here’s today's brief, for our valued subscribers only.

Just happened

Blackstone’s milestone

Source: Blackstone

Buried in the back of Steve Schwarzman’s book What It Takes: Lessons in the Pursuit of Excellence, out this month, is the news that Blackstone has raised the largest ever private equity fund, collecting $26 billion.

“In 2019…Joe [Baratta] raised the largest private equity fund in the world, Blackstone Capital Partners VIII, with $26 billion in committed capital, a record for our industry,” Schwarzman writes. “It was more than thirty times the size of our first private equity fund, the fund Pete [Peterson] and I pounded the pavement relentlessly to raise in 1987.” Schwarzman adds he didn’t have to make a single presentation to investors when raising BCP VIII – a testament to the strength of the asset management giant’s brand. “Joe and our fantastic team did it all. It was a proud moment for me.” It’s a proud moment for the industry too, we say.

Blackstone hasn’t yet said whether the fund has held its final close. Either way, the fund has eclipsed Apollo Global Management‘s $24.7 billion Fund IX, the previous record holder. The question to ask is: with the cycle potentially about to turn, is now the right time to raise the largest ever PE fund? Let us know.

Infrastructure’s daring decade

Sister publication Infrastructure Investor celebrated its 10th anniversary this year and to mark a decade of covering the asset class, it released a special anniversary issue, a weighty 178-page labour of love aptly titled The Decade. The special edition takes readers through private infrastructure’s last 10 years from the aftermath of the global financial crisis through the emergence of renewables to the rise of ESG, predicts 10 trends likely to shape the decade ahead and features a selection of industry-leading thought leadership. To read it, start here.


Verdad’s hard truths. Public equity investor Verdad Capital has some hard truths for the PE industry when it comes to leverage. According to the firm’s latest weekly research note, the average PE company is bought at 12x EV/EBITDA – in line with the S&P 500 – compared with 6x EV/EBITDA across Verdad’s portfolio of small value stocks in the US and Europe. Verdad’s low valuations translate to a 3x debt/EBITDA ratio, versus 6x for PE firms – the level above which the Federal Reserve considers excessive. The upshot? Its portfolio is less exposed to default risk and has outperformed the Cambridge Associates US PE Index.

Ready for more co-investments. South Carolina Retirement System Investment Commission teamed up with GCM Grosvenor in June to ramp up its co-investment programme, which is expected to account for up to 8 percent (more than $2.5 billion) of its total AUM. In a Q&A to come on PEI with its CEO and CIO we find out how the pension intends to achieve this. Spoiler: it’s eyeing a lot of smaller transactions with top-tier GPs.

Up your EQT IQ. Can’t get enough of EQT’s listing? Neither can we. Over on sister title Private Funds CFO, Philippa Kent highlights some interesting nuggets in the firm’s IPO prospectus that shine a light on the issues PE firms of a certain size have to deal with. Among the highlights are an investigation into “unauthorised payments” and its ongoing court battle with the Swedish tax authorities.

Dig deeper

Earl-EBRD gets the worm. The European Bank for Reconstruction & Development has agreed to commit €30 million to Earlybird Digital East Fund II, according to a report on the institution’s website. EBRD has made one other commitment to a 2019-vintage private equity fund. Here’s a breakdown of the €2.4 billion institution’s total investment portfolio. For more information on EBRD, as well as more than 5,900 other institutions, check out the PEI database.

She said it

“Just investing in funds is not something that’s attractive to us, it’s really through co-investments that we learn about the market, about the key players, how assets are priced.”

Jaroslava Korpanec, investment director at Allianz Capital Partners, explains why the insurance group’s alternatives unit is increasing its co-investment exposure at an industry conference in London last week.

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Today’s letter was prepared by Isobel MarkhamAdam LeCarmela MendozaAlex Lynn and Bruno Alves.

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