US alternative investment firm Blackstone has just closed its largest ever Asia fund.
The Blackstone Capital Partners Asia III closed at US$13.1 billion, higher than the $10 billion target and more than twice the size of its previous Asia vehicle. The company says the fund was oversubscribed and reached its hard cap. PitchBook data shows that the predecessor fund, Blackstone Capital Partners Asia II, has a total size of $6.8 billion.
The successful fundraise reflects both recent strong performance in Asia and Blackstone’s conviction in the region’s potential. According to the firm, it invested over $7 billion in Asia, particularly India and Japan, in 12 transactions over the past 24 months, with 15 exits over the same period.
“For two decades, we have focused on building businesses into market leaders and driving performance for our investors. We believe our differentiation lies in our scale, supported by homegrown teams across the region’s major markets; strong performance; and our control-oriented strategy,” according to Amit Dixit, head of Asia for Blackstone Private Equity.
The strong fundraising also suggest room for growth and uptake in Asia for classic control-oriented private equity investment versus other markets, especially the US. North American buyout investment has lately slackened off in both investment and performance as returns slip.
“Asia Pacific is the fastest-growing region in the world, presenting compelling opportunities to invest at scale behind our high-conviction themes and deliver for our investors,” says Joe Baratta, global head of Blackstone Private Equity Strategies.
Sceptics might point out that in Asia, the asset class has not yet had room to outgrow its boots as it has in the US in particular. US pension funds and other institutions that committed heavily to the asset class in hopes of substantial outperformance have arguably not been correspondingly rewarded.
Asian institutional investors, meanwhile, still have room to substantially increase their private equity allocations. In the process, they may be able to grow their exposure while avoiding the missteps of their Western peers.
Blackstone’s fundraising also reflects another trend in current private equity capital commitments. The company has emerged a winner in the industry’s consolidation around fewer and ever larger major players. Institutions are rewarding these winners with their big commitments.
According to Bain & Company’s analysis of Preqin data, last year, Asia-focused private equity fundraising reached its lowest level since at least 2020, with just $58 billion closed during the year. Investor support for Blackstone is all the more significant in this context.
