Blackstone’s private wealth business plans to enter at least two new European markets next year.
The mentioned information was published by the media with reference to two executives of the specified company. In this context, it was separately noted that the expansion of the scale of the market presence is aimed at tapping the growing demand from the well-off.
Blackstone, which is based in New York, has made raising funds from wealthy individuals its top priority against the background of a state of affairs, the main components of which are the market environment, characterized by a high degree of instability, and the tendency, which is that private investment companies seek to diversify their customer base away from institutional clients.
Last month, the mentioned firm released data on its earnings for the third quarter of the current year. During the corresponding period, the inflow of funds was recorded at $41 billion. At the same time, the volume of deployed and committed capital for the third quarter of 2024 amounted to $54 billion. It is worth noting separately that this indicator is the highest in the last two years. The corresponding result was recorded against the background of a revival in dealmaking activity amid the beginning of easing of the monetary policy of the Federal Reserve System and optimistic economic prospects.
The volume of assets under management of Blackstone has reached the $1.1 trillion mark. This figure is a record.
Over the past few quarters, high interest rates have been a factor in the negative impact on some aspects of Blackstone’s operations. After the Fed decided in September to lower the cost of borrowing, the burden from the mentioned factor began to decrease.
For the third quarter of 2024, private equity funds of Blackstone appreciated by 6.2%. Infrastructure funds for the same period appreciated by 5.5%. Against this background, the company has achieved the highest fund appreciation in the last three years. Chief executive officer of Blackstone Steve Schwarzman described last quarter’s results as broad-based acceleration across the firm’s business.
The company’s distributable earnings, which represent cash that can be used to pay dividends, were fixed at $1.3 billion in the third quarter of the current year. This figure is 6% higher than the reading of a year ago. Earnings per share was $1.01. It is worth noting that the preliminary LSEG estimate provided that the appropriate indicator would be fixed at $0.92.
In October, Blackstone’s market capitalization was fixed at $195 billion. The company’s European wealth business currently has offices in London, Zurich, Milan, Frankfurt and Paris. The firm has so far kept secret information about which new markets its plans to expand into the mentioned region relate to.
Blackstone’s wealth products have a minimum investment threshold, which ranges from $10,000 to $25,000. Over the past few years, the company has significantly increased its private wealth assets worldwide. In 2020, the corresponding indicator was fixed at $103 billion. Currently, this figure is worth approximately $250 billion.
It is worth noting that navigating the fragmented European market and its many regulatory regimes has posed challenges. France and Italy have been Blackstone’s biggest growth markets in wealth. At the same time, the situation in the United Kingdom is slower going. This was reported by the media with reference to the executives of the company.
Rashmi Madan, head of Europe, Middle East, and Africa (EMEA) in Blackstone’s private wealth solutions group, said that the European market is more complex than the US market. According to her, regulatory changes across Europe, including in the United Kingdom, aimed at stimulating retail investment in private markets, have become a positive sign. She stated that there are growing changes in Europe. In this context, the importance of long-term investment was highlighted separately.
Rashmi Madan stated that the United Kingdom is a core market for the wealth business, even though after the Brexit vote in 2016, the number of well-off people moving to other countries began to grow. She was speaking ahead of Britain’s budget announcement last week. It is worth noting that in the United Kingdom, some taxes have been raised for the rich. Blackstone did not comment on the country’s budget.
To implement the mentioned business expansion efforts, the company has promoted Sheila Rapple to chief operating officer for EMEA wealth, who relocated to London from New York in October.
Blackstone is pinning its hopes on its wealth expansion on a range of semi-liquid evergreen funds designed for retail investors, spanning private equity, credit, and property. Early next year, the company intends to launch two new funds in the areas of lending and infrastructure. It is currently known that initially the appropriate intention will be implemented in the United States. The products of this firm are typically sold to wealthy individuals through partnerships with local banks and wealth managers, such as French lender BNP Paribas and Italian insurer Generali.
Buying into private markets means that retail investors are exposed to illiquid and difficult-to-value assets.
For more than a year, until February 2024, Blackstone limited client withdrawals from its flagship $55 billion BREIT property fund. In this context, it is worth noting that investors sought to exit this fund against the background of a global downturn in the commercial real estate area.
Rashmi Madan stated that Blackstone’s retail funds typically have a one or two-year soft lock. During this period, investors can cash out funds by paying a penalty fee. Then they get the opportunity to exit monthly or quarterly, subject to fund-level caps. According to Rashmi Madan, this is a signal to investors that funds are semi-liquid. Also, in the relevant context, it was noted that they can effectively carry out financial injections in private markets.
It is worth mentioning that in September it became known about Blackstone’s intention to acquire AirTrunk, an Australian data center group. The cost of this deal is expected to be $16.1 billion. The implementation of this intention will be Blackstone’s largest investment in the Asia-Pacific region. The expected deal also highlighted the growing importance of data centers, including in a financial context.
Blackstone was founded in 1985 as a company specializing in mergers and acquisitions. The founders of the firm are Peter G. Peterson and Stephen A. Schwarzman, who worked together at Lehman Brothers.
As we have reported earlier, Blackstone and Vista Equity Partners to Acquire Smartsheet.
