Blackstone, an alternative asset manager with more than $1 trillion in AUM, continued to gain traction with investment products targeting the wealth segment, raising $7.5 billion in the channel during the second quarter. The firm also said it plans to launch two more funds for these clients in early 2025; one focused on infrastructure and the other on private credit.
Of the $7.5 billion raised in assets, $6 billion came for its BCRED, BXPE and BREIT vehicles, which focus on private credit, private equity and real estate, respectively. Year-to-date, Blackstone reported that it has $13 billion in those products, already surpassing the entire fundraising total from individuals in all of 2023.
Blackstone accounts for one important part of the overall fundraising in products aimed at retail investors. Fundraising for alternative assets offered to retail investors totaled $47.6 billion year-to-date through May, according to a report from Robert A. Stanger & Co.
“As we have said for some time, we believe that flows in the wealth channel ultimately follow performance,” said Jonathan Gray, president and COO of Blackstone during the company's quarterly earnings call.
Gray pointed to BREIT and BRED's double-digit annualized net returns since their inception and BXPE's healthy inflows in the six months since its inception.
“That's what ultimately matters to our core customers and that's what we have to do,” Gray said. “We have to get through this downturn and people see that the semi-liquid structure of the product works. I think this will give additional confidence. As long as we continue to execute, that's key in this private equity channel, and I feel good about our ability to do that.”
In addressing increasing competition with other asset managers targeting the private wealth space, Gray pointed to Blackstone's “first mover advantage” and the strength of its brand based on its overall track record as critical to its future success .
“It's definitely an area of large-scale opportunity, and everyone in the industry is recognizing that now,” Gray said. Blackstone has a team of more than 300 people focused on the wealth channel that develops products globally and interacts with financial advisors and end investors.
“The one advantage in this market versus the institutional market is that there you can have thousands and thousands of individual private equity firms or real estate firms or credit firms,” Gray said. “When you get to private wealth, brands will matter (as well as) scale and ability to serve. There will be a smaller number of players in that segment. It will grow over time, but it requires something different and we have a pretty significant first-mover advantage.”
BCRED, a non-trading business development company focused on private credit, led the way with $3.4 billion in the quarter. Overall, BCRED has $67.9 billion in total AUM. BXPE, Blackstone's private equity fund for accredited investors, raised $1.6 billion and has raised $4.3 billion in the six months since its launch.
BREIT, its non-traded REIT, raised $900 million — its best fundraising quarter in more than a year. The non-traded REIT has a total AUM of $56.7 billion. Blackstone also reported that it has now met 100% of redemption requests every month since February, signaling that it has passed a lies where he was forced to meet the demands of redemption. BREIT has faced concerns about it evaluation methodologies.
“June claims were down 85% from last year's peak, down 50% from May and have fallen further month-to-date in July,” Gray said during the quarterly earnings call.
Overall, its permanent vehicles have more than $240 billion in assets, and it teased that it will launch two new strategies in early 2025. The infrastructure-themed vehicle will invest in equities, securitizations and related credit. with the infrastructure. And the new loan fund will be multi-asset based.
As for its more traditional drawdown funds, which are open to qualified buyers, Blackstone said it plans to launch new vintages of its $5 billion life sciences fund, the opportunistic private credit strategy of $9 billion, secondary private equity fund of $22 billion and private equity of $6 billion. Asia Fund. She expects the newer funds to be as large or larger than the current ones.
For its overall revenue, Blackstone's performance was impacted by mixed results in its real estate holdings. Gains in credit and private equity were not enough to offset real estate results. Its fee earnings fell 3% to $1.11 billion.