Blackstone raised $4.8 billion-plus for a fourth offering focused on tactical opportunities, a strategy pioneered by the private equity giant.
The amount secured, disclosed in Form D documents, puts Blackstone Tactical Opportunities Fund IV ahead of its $4.5 billion target, previously reported by Buyouts.
Blackstone has no near-term plans to close the fund, sources told Buyouts, and is instead expected to continue capital raising into next year. The firm declined to comment.
Fund IV’s predecessor was completed in 2019 at roughly $4 billion, according to various sources, including pension documents.
Tactical Opportunities was launched in 2011 by Blackstone veterans led by global head David Blitzer and COO Chris James. Designed to be a flexible, opportunistic investor of equity, debt and hybrid capital in assets, markets and sectors not covered by the firm’s other funds, it initially took aim at opportunities emerging from the financial crisis.
“We were seeing some very interesting transactions out there that had nowhere to go,” Blitzer told Buyouts in an interview last year.
Blackstone describes Tactical Opportunities as a nimble and unconstrained strategy active “in times of stability or volatility, in good markets or in bad.” Investments are typically differentiated, reflecting “less correlation and lower volatility.”
Today a core Blackstone platform with $34 billion of managed assets and 157 investments, Tactical Opportunities helped inaugurate a new niche category known in the market as special opportunities.
“We created an asset class for what we do,” Blitzer said. “Today, market agents and intermediaries will see a specific type of deal and say: ‘That’s a Tac Opps.’”
Other GPs with a special opportunities platform, or something like it, include Apollo Global Management, which in March raised $4.6 billion in the close of Apollo Hybrid Value Fund II. Another is Ares Management, which in October wrapped up Ares Special Opportunities Fund II at $7.1 billion.
While strategies differ in their nature and objectives, they share key characteristics, such as a concentration on dealflow that is beyond the scope of a firm’s existing funds. Other common features are the provision of tailored, non-control capital and an all-weather approach to deal sourcing and investing.
Blackstone’s Fund IV will make up to 45 investments in a range of global industries, Buyouts previously reported, each expected to be held for four to five years. Target opportunities will have enterprise values of $100 million to $400 million.
Investing will be structured for downside protection while also allowing for potential outperformance. The portfolio is expected to consist of about 50 percent hybrid investments, with the rest split between equity and debt.
Tactical Opportunities’ recent deals include a late 2021 investment in Life Science Logistics, a provider of healthcare supply-chain solutions. Around the same time it acquired Sustana, a manufacturer of sustainable recycled fiber, paper and packaging, from HIG Capital.
The strategy was earning an aggregate multiple of 1.6x as of September, Blackstone reported in its third-quarter 2022 earnings. The combined net IRR on realized investments was 18 percent, and the total net IRR, 13 percent.