Blackstone takes fundraising honours

Blackstone Group has claimed bragging rights to the world’s largest private equity fund after it held a first close on its latest vehicle at US$10.3bn. The group expects to add a further US$2.5bn to the total when it closes the door to new investors early next year.

The result comes in the same week that fellow buyout giant KKR rounded off a second dedicated European fundraising at €4.5bn, representing the largest amount raised for the European buyout market in any one week.

It is understood that Blackstone’s final tally does not include a sidecar fund, which will run pari passu to the main vehicle and will offer privileged terms to the firm’s major investors.

A source close to the fundraising contrasted the latest experience with Blackstone’s previous forays in the fundraising market: “We didn’t really have to leave the house for this one. We sent out letters asking how much investors wanted to commit and received expressions of interest for around US$15bn.”

Volkert Doeksen, CEO of AlpInvest, the largest European investor in private equity funds, said that appetite for large buyout funds was driven by very good returns over the last two years, liquidity in the debt markets and the return of strategic buyers.

“It is my hope and expectation that deal sizes will move up and that is why funds are getting bigger,” he told IFRBuyouts. “It is also not always desirable to see seven or eight groups team up to do one deal. We think it is safer for two or three larger funds to be able to do it along with co-investors.”

Blackstone’s recently completed European deals include Spirit Group, the UK pubs business that is currently the subject of bid speculation; German chemicals company Celanese, which many have compared to a hedge fund “quick-flip”; New Skies Satellites in the Netherlands and Sulo Group, which recently bolted-on Cleanaway Deutschland.

Currently, Blackstone is part of a consortium bidding for Danish telecoms company TDC. It is also linked to a joint bid for UK cable companies NTL and Telewest.

This line-up would translate into an impressive list of deals, but Blackstone has seen even more companies slip through its fingers in recent months. The firm was a failed bidder for Wind, Auna (Amena) and Cesky Telekom and lost out to private equity competitors on Irish Pharma and Warner Chilcott. The worry must now be that returns are unsustainable because competition has intensified.