Blackstone Continues Pursuit of $1T AUM

By David G. Barry

Despite rising inflation and a highly competitive fundraising market, Blackstone believes it remains on course to bring assets under management to $1 trillion in 2022.

At the end of the first quarter, the alternatives firm had AUM of $915.5 billion, up 41% from the $648.8 billion the year prior. During the first quarter, Blackstone had $49.9 billion of inflow capital.

During a conference call discussing the firm’s first quarter results, Jonathan Gray, Blackstone’s president and chief operating officer, said the firm’s “fundraising momentum has never been stronger.”

He said the firm is benefitting from a series of events, including the “continued move into alternatives” by investors; the goodwill that Blackstone has built with its clients during its 36 years of existence; the fact that it’s raising capital globally and, perhaps most importantly, that it is raising capital from not just institutional clients, but also retail and insurance clients.

Blackstone now has $338.2 billion in AUM in so-called perpetual funds—funds without a maturity or end date. That’s up from $149 billion a year ago. Designed for retail investors, these funds are currently investing in real estate and credit, and account for 43% of the group’s assets.

Gray said that during the first quarter, Blackstone took in $4 billion to $5 billion a month from retail investors. “Retail remains strong despite the headwinds,” he said. Pegging the retail market at “$80 trillion,” he said it is only 1% penetrated. The firm is said to be working on a private equity-focused retail product, but Gray said the firm could not discuss that publicly at this time.

Gray also indicated that the firm is on track to raise $150 billion for 17 funds over roughly the next 15 months. Included in that mix is its core private equity fund, which some have speculated could hit $30 billion, and its core real estate fund, which is expected to top the firm’s $20.5 billion in 2019. It also has closed on $14 billion of the $20 billion it has targeted for its secondary fund—a figure that would make it the largest such fund ever raised. The firm also announced that it has closed its inaugural royalty and structured credit-focused life sciences fund at $1.6 billion.

“Despite a more crowded fundraising environment in the private equity area today, our confidence in this target remains extremely high,” said Gray. “It is reflective of the strength of our brand, our track record, the breadth of our platform and the geographic reach of our fundraising.”