Blackstone PE flagship to be smaller than predecessor as firm reaches $1trn in AUM

Blackstone’s latest private equity flagship fund will reach a total size “in the low-$20 billion range,” president and COO Jonathan Gray said on the firm’s second quarter earnings call, as the alternatives giant reported it had reached $1 trillion in assets under management.

Blackstone Capital Partners IX had raised $16.62 billion as of 30 June, with $1.1 billion committed to the vehicle during the quarter, according to the firm’s earnings statement. The private equity business saw total inflows of $8.5 billion during the quarter and $36.3 billion over the past twelve months.

Since Fund IX was announced, Blackstone has been reluctant to specify its target. Bloomberg previously reported that it could be as much as $30 billion. During its Q2 earnings call last year, Gray said only that it should be “at least as large as the prior fund,” which closed in 2019 at $26.2 billion.

Blackstone as a whole saw inflows of $30.1 billion and $158.4 billion over the past quarter and past 12 months, respectively, its earnings statement said. It has $194.5 billion of dry powder to deploy, marking a record for the firm, according to Gray as well as the statement.

Gray said LPs are still challenged when it comes to private markets allocations because of the denominator and numerator effects on their portfolios. Blackstone, however, is starting to see a pick-up in activity which will begin to alleviate the numerator effect.

“As markets rally, that tends to lead people to have more confidence to transact – which plays its way through, ultimately, to our customers,” Gray said. “Right now, there’s a bit of a lag… in terms of fundraising activity, but a sustained good period for markets is very helpful for our ability to raise capital.”

Blackstone has also reached its long-time goal of hitting $1 trillion of assets under management – the first alternative manager to reach this milestone, chairman and CEO Stephen Schwarzman said on the earnings call.

“This achievement is significant in many ways, including for me personally,” Schwarzman said. “We’ve delivered for [investors] in good times and bad, generating $300 billion of aggregate gains with minimal losses. In fact, virtually all of our drawdown funds we’ve launched in our history have been profitable for our investors.”

Private equity is Blackstone’s second-largest business, making up around 29 percent of AUM. Private equity AUM increased 7 percent in the second quarter, hitting $295.3 billion, the statement said.

Real estate – Blackstone’s largest business – reached AUM of $333.2 billion in the second quarter. Credit and insurance is also sizeable at $294.6 billion. Its hedge fund solutions business makes up the remaining $78.2 billion of AUM.