Blackstone Expands Asset Management Operations in Europe
Leading investment firm Blackstone Group (NYSE:BX) aims to expand its private asset management business into at least two new European markets within the next year. This move is intended to meet the increasing demand from wealthy individuals. This strategic step is part of Blackstone's effort to draw funds from affluent clients, moving beyond its traditional institutional investor base.
Currently, Blackstone's European operations are situated in key financial centers such as London, Paris, Zurich, Milan, and Frankfurt. While the company has not disclosed the new markets it plans to enter, this expansion underscores its commitment to the region despite the challenges of navigating Europe's complex regulatory environment.
The firm's asset products, which require a minimum investment of between $10,000 and $25,000, have seen significant growth. Blackstone's global private asset management assets rose from $103 billion in 2020 to approximately $250 billion. This represents 23% of the company’s total assets of $1.1 trillion. The specific value of Blackstone's asset management assets in Europe has not been revealed.
France and Italy stand out as Blackstone's fastest-growing asset management markets in Europe, while progress has been slower in the United Kingdom. Rashmi Madan, head of Blackstone’s Private Equity Solutions group in Europe, the Middle East, and Africa (EMEA), acknowledged the challenges posed by the fragmented European market, stating, "It’s not like the US. There’s a lot more complexity, and [Blackstone] understands that."
Madan also noted that regulatory changes across Europe, including in the UK, are encouraging signs for retail investments in private markets and emphasize the importance of long-term investing. Despite some wealthy individuals relocating from the UK post-Brexit, Britain remains a key market for Blackstone's asset management business.
To strengthen its expansion efforts, Blackstone has promoted Sheila Rapple to the position of Chief Operating Officer for EMEA Asset Management. Rapple, who moved from New York to London in October, sees "a huge opportunity" in the European market.
Blackstone relies on semi-liquid 'evergreen' funds that include private equity, credit, and real estate to drive growth. The company plans to launch two new funds in the credit and infrastructure sectors, initially targeting the US market early next year.
The company's retail funds typically come with a one- or two-year 'soft lock' period during which investors can withdraw their funds without penalty. After this period, investors have the option to exit monthly or quarterly within certain fund level limitations. This structure aims to highlight the illiquid nature of investing in private markets.
Blackstone’s approach to selling its asset management products generally involves partnerships with local banks or asset managers such as BNP Paribas (OTC:BNPQY) and Generali (BIT:GASI).
However, investing in private markets also carries risks. Indeed, due to a decline in the global commercial real estate market, Blackstone limited investor withdrawals from its $55 billion 'BREIT' real estate fund for more than a year until February, highlighting potential liquidity and valuation challenges of such assets.
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