Blackstone energy fund nearing $4.5bn cap

The global private equity giant reported economic net income (ENI) of $758m during the third quarter, up 18 percent from last year.

US-based alternatives firm The Blackstone Group, which is currently raising its second energy fund, is “well on its way” towards the $4.5 billion cap, chief financial officer Lawrence Tosi said during a conference call with investors after the global private equity firm released its third-quarter results.

If it closed on $4.5 billion, Blackstone Energy Partners II would exceed by a wide margin the $2.5 billion raised by its predecessor fund, Blackstone Energy Partners (BEP), which was its first dedicated energy-focused private equity fund.

BEP, which closed in September 2012, invests in control and control-oriented equity investments within the energy and natural resources sector on a global basis. Blackstone Capital Partners VI, the firm’s $16 billion diversified global private equity fund, invests alongside BEP in energy and natural resources transactions.

Blackstone’s new core-plus real estate platform is nearing $2 billion in commitments, added Tosi.

“We are launching new strategies in our secondaries business, which just closed on $4.4 billion for its newest fund, nearly doubling the last pre-Blackstone fund in part by accessing channels uniquely developed by Blackstone,” Tosi said.

The global private equity firm is also adding €1.5 billion to its fourth European Real Estate fund, which is double the size of its predecessor fund, he added.

“These fundraisers will drive growth for Blackstone, and this is before we even begin the launch of our flagship seventh global private equity fund this year and eighth global real estate fund early next year,” said Tosi.

Over the last year, Blackstone saw a record $55 billion of organic inflows, 65 percent of which, or $36 billion, come from its new funds, businesses and strategies that “we didn’t launch until a few years ago as we continue to innovate best in-class products and extensions across Blackstone,” he said.

Tosi said he sees continuing strength in alternatives assets going forward, and that particularly the case for Blackstone given that almost all of its drawn-down funds had hit their hard caps over the last several years.

Blackstone reported economic net income (ENI) of $758 million during the third quarter, up 18 percent from last year. Total assets under management (AUM) hit a record $284 billion, up 15 percent year-over-year, despite returning $53.2 billion to investors over the last 12 months.