US investment major Blackstone Group has held a $3.1 billion first close for its second Asia-focused private equity fund, exceeding the $2.4 billion raised for the first fund in 2018, according to the firm’s president and CEO Jonathan Gray.
Gray made the announcement during the company’s first-quarter 2021 earnings call Thursday. He did not specify the target for Blackstone Capital Partners Asia II (BCP Asia II).
US pension fund Washington State Investment Board, which recently approved an up to $250 million commitment to the Blackstone fund, had said BCP Asia II is targeting to raise $6 billion.
“In Asia, our business is expanding further, building on our long-term success in the region. We held a $3 billion first close for the second vintage in private equity, which is already larger than the first,” Gray said.
Gray first announced in January that Blackstone is raising its second Asia-focused PE fund. BCP Asia focuses on buying controlling or significant minority stakes 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.
The $3.1-billion first close of BCP Asia II comes as the region attracted $185 billion in PE investments in 2020, up 18.6% year-on-year, according to data compiled by Bain & Company.
At the beginning of this month, PE giant KKR announced the close of its fourth Asia fund at $15 billion, the largest ever in the region, while Carlyle Group, another PE major, is in the market for a new Asia-focused fund.
In Q1, Blackstone’s private equity business had total assets under management of $211.8 billion, a 21% increase from the same period last year. The growth covers the $7.8 billion of inflows in the quarter, including the $3.1 billion initial close of BCP Asia II, and $22 billion over the last 12 months.
Blackstone raising bigger Asia real estate fund
Aside from raising its second Asia-focused PE fund, Blackstone is also launching its third real estate fund in Asia, Blackstone Real Estate Partners Asia (BREP Asia) III. Gray said the new fund will be at least as large as the prior fund that raised $7.3 billion.
“We are growing in Asia. The fundamentals, it’s the same story everywhere, which is as retail moves increasingly online, there’s more demand for warehouses, particularly last-mile warehouses,” Gray stressed.
In September 2020, multiple regulatory filings showed that Blackstone raised more than $1.9 billion for a set of Asia-focused real estate funds managed by its real estate investment arm, Blackstone Property Partners Asia.
The firm’s real estate business saw its AUM increase by 22% in the first quarter of this year, from a year earlier, to $196.3 billion, with inflows of $8.6 billion in the quarter and $29.4 billion over the last 12 months. Real estate realised $2 billion in the quarter and $15.7 billion from a year earlier.
Gray said Blackstone will focus on last-mile warehouses even as he expects more traditional demand from automotive, housing, and other businesses as the global economy reopens.
“If you think about our real estate portfolio and why we have confidence looking forward, is because we’re 40% allocated to the best sector in real estate globally,” he said.
Blackstone’s AUM up 21% year-on-year
Blackstone Group reported record assets under management of $649 billion in the first three months of this year, up 21% from a year earlier.
Distributable earnings more than doubled year-over-year to $1.2 billion, fee-related earnings rose nearly 60% year-over-year and for the last 12 months, were up 40% to a record $2.6 billion, according to its chairman, CEO, and co-founder Stephen Schwarzman.
“Investment performance was extremely strong again in the quarter, as it has been for over 35 years, driving the balance sheet receivable to record levels,” he said.