Blackstone opens private markets fund to non US investors

Blackstone has launched a fund giving eligible investors outside the US access to private equity, infrastructure, real estate and private credit through a single investment, as the alternative asset manager expands its push into the individual-investor market.

The Blackstone Private Markets Fund, or BXPM, is a perpetual vehicle that will invest across existing Blackstone funds rather than requiring investors to commit separately to individual strategies, the company said on Thursday, 24 September.

This is the first time Blackstone has offered eligible non-US individual investors access to its institutional-style perpetual funds through one multi-asset vehicle.

The fund has a minimum initial investment of $10,000 and will accept subscriptions monthly at net asset value, according to Blackstone’s offering terms. Investors are expected to be able to seek redemptions quarterly, although withdrawals are capped at 3% of the fund’s net asset value and are not guaranteed.

Blackstone, which manages more than $1.3 trillion, has been expanding products aimed at wealthy individuals as private-equity firms look beyond pension funds, sovereign wealth funds and other traditional institutional investors for fresh capital.

Its private wealth business manages about $324 billion.

BXPM will initially place half its portfolio in Blackstone’s private-equity strategy, according to fund information published by the company. About 20% will go into infrastructure funds and another 20% into Blackstone Real Estate Income Trust, or BREIT.

The remaining allocation includes Blackstone’s credit and real-estate credit funds. Blackstone said it may also eventually maintain a liquidity sleeve equivalent to about 2.5% of the portfolio.

The structure effectively gives investors exposure to businesses representing hundreds of billions of dollars of Blackstone assets. The firm manages about $364 billion in private equity, $90 billion in infrastructure, $314 billion in real estate and $469 billion across credit and insurance.

“BXPM is the first strategy that gives eligible investors access to Blackstone in a single, simple allocation,” Joan Solotar, Blackstone’s global head of private wealth, said.

Rashmi Madan, global head of portfolio solutions and chief executive of BXPM, said the fund had been designed to combine private equity, infrastructure, real estate and private credit in one portfolio.

The product is structured as a Luxembourg investment company and can be marketed to professional investors across the European Economic Area and Britain, as well as eligible investors in some other jurisdictions. Blackstone says the fund can also be offered to investors below the professional-investor threshold in certain European countries.

The fund is not being offered to US investors under the launch announced on Thursday.

Blackstone’s move comes as the world’s largest alternative-asset managers compete more aggressively for money from wealthy individuals. Private equity and other alternative investments were historically dominated by institutions because of high minimum commitments, long lock-up periods and complex capital calls.

Perpetual funds have helped managers loosen some of those constraints. Unlike traditional private-equity funds, which typically raise capital for a fixed investment period and return it as assets are sold, perpetual vehicles can continuously accept new money and reinvest proceeds.

BXPM will have no capital calls, with invested money deployed immediately through its underlying Blackstone funds.

That does not make it equivalent to a conventional mutual fund or exchange-traded fund. Its assets remain largely private and illiquid, and Blackstone warns that quarterly redemptions can be restricted, delayed or suspended.

Investors redeeming shares within 24 months may also face an early-redemption deduction. Blackstone’s disclosures say there is no organized secondary market for the fund and that investors should not assume money will always be available when they seek to withdraw it.

BXPM itself will not charge a separate management or performance fee, but investors will bear fees charged by the underlying Blackstone funds.

Blackstone says underlying management fees are typically about 1.25% of net asset value annually, while performance fees are typically 12.5% above a 5% hurdle. An additional administration fee of 0.10% a year applies at the BXPM level, while some share classes can carry distribution and servicing fees of as much as 0.85%, or 0.95% in some jurisdictions.

The fund can also use leverage of as much as 30% of assets. Blackstone cautions that investors ultimately bear several layers of costs because BXPM holds stakes in other Blackstone-managed funds, and that those expenses can be substantially higher than investing directly in a single underlying fund.

The launch is the first multi-strategy product from Blackstone Portfolio Solutions, an initiative the firm announced earlier this year as it sought to offer investors portfolios spanning several parts of its private-markets platform.