Blackstone, an alternative asset manager with more than $1 trillion in AUM, continued to gain traction with investment products aimed at 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 those clients in early 2025; one focused on infrastructure and the other on private credit.
Of the $7.5 billion raised in wealth, $6 billion came to its BCRED, BXPE and BREIT vehicles, which focus on private credit, private equity and real estate, respectively. Year-to-date, Blackstone reported it has $13 billion in those products, already topping its full fundraising totals from individuals in all of 2023.
Blackstone accounts for a significant portion of overall fundraising into products aimed at retail investors. Fundraising for alternative assets offered to retail investors reached $47.6 billion year-to-date through May, according to a report from Robert A. Stanger & Co.
“As we’ve been saying for some time, we believe flows in the wealth channel ultimately follow performance,” Jonathan Gray, Blackstone president and COO said during the company’s quarterly earnings call.
Gray pointed to BREIT and BRED's double-digit net annual returns since their inceptions and BXPE's healthy flows in the six months since its launch.
“This is what ultimately matters to our underlying clients, and this is what we’ve got to do,” Gray said. “We have to get through this downturn period and people see the semiliquid product structure work. I think that will give additional confidence. As long as we continue to execute, that’s the key in this private wealth channel, and I feel good about our ability to do that.”
In addressing the growing 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 central to its future success.
“It's definitely an area of large-scale opportunity, and everybody in the industry is recognizing this now,” Gray said. Blackstone has a team of more than 300 people focused on the wealth channel globally developing products and interacting with financial advisors and end investors.
“The one advantage in this market vs. the institutional market is 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, the brands are going to matter (as well as) the scale and the ability to service. It 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 meaningful first-mover advantage.”
BCRED, a non-exchange traded 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 amassed $4.3 billion in the six months since its launch.
BREIT, its non-traded REIT, raised $900 million—its best quarter of fundraising in more than a year. The non-traded REIT has a total AUM of $56.7 billion. Blackstone also reported that it has now fulfilled 100% of repurchase requests every month since February, signaling it has moved past a stretch where it was forced to gate redemption requests. BREIT has faced concerns about its valuation methodologies.
“Requests in June were down 85% from the peak last year, down 50% from May and have declined further month-to-date in July,” Gray said during the quarterly earnings call.
Overall, its perpetual vehicles have more than $240 billion in assets, and it teased it will launch two new strategies in early 2025. The infrastructure-themed vehicle will invest in equities, secondaries and credit tied to infrastructure. And the new credit fund will be multi-asset based.
In terms of its more traditional drawdown funds, which are open to qualified purchasers, Blackstone said it plans to launch new vintages of its $5 billion life sciences fund, $9 billion private credit opportunistic strategy, $22 billion private equity secondaries fund and $6 billion private equity Asia fund. It expects the newer funds to be as large or larger than the current ones.
For its overall earnings, Blackstone’s performance was affected by mixed results in its real estate holdings. Profits in credit and private equity were not enough to offset the real estate results. Its fee-related earnings fell 3% to $1.11 billion.