Blackstone raises over $5bn for second Asia PE fund, eyes bigger property fund

Jul 25, 2021 | News

Global alternative asset manager Blackstone has raised $5.24bn so far for its second Asia private equity fund and has begun raising a third real estate fund for the region, it said during a Q2 2021 earnings call last week.

Blackstone expects to hit the $6.4bn hard cap for its second Asia PE vehicle, “which is nearly three times the previous fund,” said president and COO Jonathan Gray during the call.

The investment firm, which ended the second quarter with $684bn in assets under management (AUM), had held a $3.1bn first close for its second Asia fund in April. Limited partners include the US pension fund Washington State Investment Board, which committed up to $250m to the vehicle.

Blackstone’s first Asia PE fund was closed at $2.3bn in 2018, focusing on buyout opportunities in sectors such as healthcare, high-end manufacturing and services, and the so-called consumer upgrade sector in India, China, Korea, Japan, Australia, and Southeast Asia.

Blackstone’s private equity business makes growth equity, tactical opportunities, secondaries, infrastructure and life sciences investments. The firm’s total private equity AUM in the second quarter increased 21% year-on-year to reach $223.6bn.

 

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Its PE funds appreciated 13.8% in the second quarter and 52.2% over the last 12 months, driven by IPOs of Indian portfolio companies TaskUs, a technology services company for online platforms, and Sona Comstar, a component supplier for electric vehicles.

“Comstar was valued at a multiple of the original cost of nearly 10 times at the end of the quarter and TaskUs at nearly eight times, further building upon the firm’s highly successful track record in Asia,” Gray said.

The PE business had secured capital commitments of $127.23bn and realised a 16% net IRR as of the end of June.

Another real estate fund for Asia

The firm also anticipates its third Asia opportunistic real estate fund to be larger than its $7.1bn predecessor, Gray said. Opportunistic funds acquire undermanaged, well-located assets across the world to improve them and sell them.

Blackstone’s first Asia-focused property fund was closed in 2014 with over $5bn in capital commitments.

As of June 30, 2021, the net IRR for its first opportunistic realty fund for the region, BREP Asia I, stood at 13%, while that for its successor, BREP Asia II, was 11%.

In real estate, the firm makes core+, debt and global opportunistic investments. Its real estate AUM stood at $207bn at the end of June.

Fundraising outlook

“Overall, the fundraising outlook is very positive for the firm,” Gray said.

Blackstone, he said, expects to “approach $200bn of inflows, this year, including our pending insurance partnerships.”

“Over the past 12 months, we’ve deployed or committed well over $100bn. We remain focused on our high conviction thematic areas such as sustainability, logistics, digital infrastructure, housing, and the post-COVID travel recovery,” Gray added.

During Blackstone’s full-year 2020 earnings call in January, he stressed that Asia was at the top of the list in terms of geographies that the firm wanted to ramp up investments into over the next few years, based on the scale of the economies in China and India.

“I think there is an opportunity over time for us to offer products that are RMB-based. That would be something that could happen over time, that could be very large scale,” he had then said.

Besides China and India, Blackstone is looking at doing more in countries like Japan, where there is a strong desire for returns from individual investors and institutions.

Source: Deal Street Asia

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