Three things to know about Blackstone’s giant buyout fund

The Blackstone Group is set to break records this year with the final close of what is likely to be the industry’s largest-ever buyout fund.

Only three months after it formally began fundraising in January, the firm has amassed more than $22 billion for Blackstone Capital Partners VIII, according to a source familiar with the fundraise.

Bloomberg first reported the fund’s haul.

Here’s what we know about the vehicle:

It expects to raise up to $25 billion

Blackstone is clearly seizing the moment in private equity’s heady fundraising environment. The firm has raised roughly 90 percent or over $22 billion of its target for BCP VIII after less than six months on the fundraising trail.

Chief operating officer and president Jonathan Gray said on the firm’s fourth-quarter 2018 earnings call in January this year that the firm expects the fund to “exceed $20 billion in size with the vast majority raised in the first close in the next few months”.

That wouldn’t be very far now. Board meeting documents by the Massachusetts Pension Reserves Investment Management Board from February, obtained by Private Equity International, show that the firm is seeking to raise up to $25 billion.

Industry sources expect the fund to surpass Apollo Global Management’s $24.7 billion Apollo Investment Fund IX, which it raised in 2017. When successful, Blackstone’s latest offering will be more than 30 percent larger than its 2014-vintage, $18 billion predecessor.

Buyout is a core strategy, among others

Blackstone mainly targets buyouts of large businesses for its BCP fund series. It will also have scope to invest in four other “primary transactions” such as mid-market buyouts, buy-and-build platforms, control equity and development projects in energy and power, according to a 29 January investment memorandum prepared by TorreyCove Capital Partners for Oregon State Treasury.

Capital from Fund VIII will be invested in control-oriented investments mainly in North America, with approximately one-third allocated to western Europe and Asia. Key sectors are energy, financial services, healthcare, industrials, business services and technology.

It is unclear whether capital from Fund VIII has been deployed.

It has bagged significant re-ups

While it is unclear how much of the $22 billion came from Blackstone’s existing investors, three LPs stand out according to publicly available sources.

Oregon State Treasury has continued to back Blackstone’s flagship funds, committing $500 million to BCP VIII. The investor had previously committed $500 million to BCP VII and $200 million to BCP VI, according to PEI data.

MassPRIM had backed six earlier funds in the BCP series, according to the February meeting documents. The pension committed $250 million to BCP VIII, similar to each its contribution in Fund VII.

Minnesota State Board of Investment, Teachers’ Retirement System of Louisiana and Fubon Life Insurance are also repeat investors, having committed $150 million, $100 million and $50 million, respectively.

Blackstone declined to comment on the fundraise.