Breaking: New Jersey goes big with Blackstone

The council approved $250 million to a Blackstone Tactical Opportunities account, which will invest “across asset classes, capital structures, and geographies,” at its Jan. 29 meeting. Another $350 million went to two accounts managed by the firm’s credit arm, GSO Capital Partners, for investments in credit, with an emphasis energy-related credit. The $80 billion retirement system allocated another $150 million to a core-plus real estate fund managed by Blackstone.

Blackstone offered the $80 billion retirement system “favorable terms” on the accounts, including discounted fees, according to meeting materials. The firm also made sizable GP commitments to the separate accounts.

An investment memo obtained from a New Jersey spokesman indicates that state staff will gain access to “the senior investment professionals and intellectual capital of Blackstone and its affiliates on a global basis,” which will support its broader investment efforts.

Additional information about the commitments was not available as of press time. Blackstone spokesman Peter Rose could not be reached for comment.

In addition to its separate accounts, New Jersey approved four commitments to private equity and real estate funds currently being marketed by the asset management firm. The retirement system committed $100 million to Blackstone Real Estate Partners, $50 million to Blackstone Property Partners, $100 million to Blackstone Energy Partners II and $50 million to Blackstone Capital Partners VII.

New Jersey and Blackstone have a longstanding relationship, with the retirement system having committed more than $4 billion to the firm, including $1.95 billion to a strategic partnership in 2011. That partnership, which spans investments in energy, credit, special situations and other strategies, netted the retirement system a 1.4x multiple and 28.1 percent internal rate of return.