Firm: The Blackstone Group
Fund: Yet to be named
Expected Target: $2 billion to $3 billion
Key Managers: Anthony Maniscalco, Greg Hall
As part of this effort, Blackstone Group’s hedge fund division has hired Anthony Maniscalco from Barclays, where he was head of alternative asset management. In his new role, Maniscalco will team up with Greg Hall, a senior managing director, to expand its platform for buying equity stakes in leading hedge fund firms. According to a story by sister news service Reuters in late 2012, a new Blackstone Group fund will target $2 billion to $3 billion in commitments. Calls to Blackstone Group were not returned by press time.
Blackstone Group won’t be the first belle to this ball. In December 2012, Neuberger Berman’s Dyal Capital unit closed its debut fund, Dyal Capital Partners LP, a $1.3 billion fund that closed above its original $1 billion target. And Goldman Sachs & Co. created a $1 billion fund in 2007, called Petershill Fund, which buys minority stakes in hedge fund firms.
“Hedge funds continue to gain market share within the asset management industry, founder-owners are focusing on equity values and succession planning, and there is little opportunistic capital to underwrite and purchase these ownership interests,” said Hall in a press release. “It is a great time … to focus on investing in leading alternative investment firms,” he said.
Funds that buy equity stakes in hedge fund firms blur the lines between private equity and hedge funds by giving investors access to management fees and carried interest from each fund within the investment pool. Investors may prefer this investment model since it is likely to be less volatile than a typical hedge fund of funds. That’s because returns from such funds are smoothed out by annual management fees, which are predictable and typically 2 percent of the underlying fund assets. By contrast, investors in regular hedge funds of funds pay carry and management fees rather than receive them.
The allure for Blackstone Group was easy to see; Dyal Capital, for instance, was able to draw to its fund 40 institutional investors, including sovereign wealth funds, endowments and pensions. Among those investors was the New Jersey Division of Investment, which committed $200 million. And there are a number of hedge fund managers that may be looking to sell stakes in their firms, possibly to cash out or to aid in succession planning.
Blackstone Group is the largest investor in hedge funds globally and manages roughly $45 billion in discretionary assets. Overall, the firm overall manages $210 billion in alternative assets.