Blackstone’s plan was to hold an $8 billion first close in April, but was unable to make either the date or the number. It hopes to raise $20 billion, although one participating limited partner says he thinks it will be “nearly impossible.”
Blackstone is not expected to begin investing this money yet, as it still has significant dry powder in its $21.7 billion fifth fund. That vehicle held a series of rolling closes (as will fund VI), with the final one occurring almost exactly one year ago.
The fund close comes as Blackstone (NYSE: BX) reported lower quarterly profit last week, but still topped estimates. The firm also said it sees increasing investment opportunities despite volatile markets.
Blackstone reported that second-quarter profit fell to $99.9 million (earnings after taxes but before non-cash charges), compared to a profit of $735.6 million in the same quarter a year earlier. In the first quarter of 2008, the firm lost $93.6 million.
Blackstone has suffered along with the rest of the private equity industry as last summer’s credit crunch froze the debt markets for large leveraged buyouts. Blackstone has taken part in some of the largest leveraged buyouts in the industry, such as the $23 billion purchase of Equity Office Properties Trust.
“These are some of the most difficult times I’ve seen in my 33 years,” Blackstone President and COO Tony James said last week on a conference call. “The headwinds today make this a more challenging fund-raising environment.”
Still, despite the challenges, Blackstone CEO Stephen Schwarzman said in a statement there was an increasing number of attractive investment opportunities.
“We committed $2.4 billion of new equity in private equity from April through July,” Schwarzman said. The publicly traded private equity firm has also bought about $8 billion in leveraged loans.
Blackstone was the first major U.S.-based buyout firm to go public. It will be joined later this year by