Strategy review: Blackstone’s $4.5 Billion New Growth Equity Warchest

PE-giant Blackstone Group Inc. raised a gobsmacking US$ 4.5 billion for its inaugural growth equity fund – Blackstone Growth (BXG). Blackstone is known for its buyout strategies with regard to private equity. Blackstone said the growth equity fund was oversubscribed.

Blackstone experienced recent growth equity success in its investments in online dating company Bumble Inc and vegan food and drink products maker Oatly.

According to the March 2021 SWFI Global Asset Owner Survey, the majority of respondents want to overweight private equity for the next 12 months, over other asset classes.

The aim for the growth equity unit is it to invest between traditional buyouts and VC. Typically, growth-focused private equity invest in transactions for either a minority or majority stake in the target company. Venture capital strategies are fraught with market risk and product risk. Growth equity investors must manage mostly execution and management risk.

Blackstone wants to compete with TPG Capital and General Atlantic in the growth equity space. TPG Growth IV fund closed on US$ 3.7 billion and TPG Growth V fund is aiming for US$ 4 billion. Other major PE players in this space include Insight Partners, Summit Partners, TCV, TA Associates, and Spectrum Equity.

Source: SWFI

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