Blackstone taps wealth networks in ~$900m close on debut growth fund

Blackstone Group’s debut growth fund is heading for a close on about $1.5 billion, sourcing a bulk of capital from wealth channels at various financial institutions, according to people with knowledge of the process and a fundraising document. 

The fund, Blackstone Growth, held an interim close on around $900 million, according to a July 13 filing with the SEC, and is expected to hold another close in upcoming weeks that will bring the total to around $1.5 billion, sources said. 

Blackstone Growth was trying to raise between $3 billion and $4 billion, sources told Buyouts late last year. It’s not clear if the firm set a hard target or cap for the fund. 

The fund paid $30 million in sales commissions related to a host of financial institutions sourcing capital through high-net-worth channels, according to the Form D document. Many large financial institutions like investment banks maintain networks of wealthy individuals through which they provide capital to investment funds.

Blackstone Growth’s Form D fundraising document reports paying sales compensation to Merrill Lynch, Pierce, Fenner & Smith, J.P. Morgan Securities, Compass Group Global Advisors, of Chile and Korea Investment & Securities. 

The sales compensation for Blackstone Growth is higher than other funds pay for sales compensation. Generally, a placement agent will be paid 1 percent to 2 percent of commitments, a source said. 

Blackstone’s Growth team is led by ex-General Atlantic executive Jon Korngold. The team focuses on investments in companies between early stage venture and traditional buyouts in sectors like financial services, healthcare, enterprise tech and consumer and consumer technologies. 

Korngold’s team has grown to around 20 executives from firms like Carlyle Group, TCV, Andreeseen Horowitz, NEA, Vista Equity, TPG Growth and GA, Buyouts previously reported. 

The firm has closed two recent deals: Blackstone Growth led a $200 million investment in Oatly, a Swedish sustainable food company that makes oat milk; and the group took a majority stake in MagicLab, the owner of Bumble and Badoo, late last year.