Blackstone Blather: Expect $12 Billion Fund Close

The Blackstone Group plans to close its latest mega-fund by the end of next month with around $12 billion, according to multiple sources.

The vehicle was originally pitched with a $20 billion target in October 2007, and then later downsized to $15 billion. For nearly the past year, it’s been stuck at around $9 billion.

The $12 billion figure isn’t definitive, as there still are a bunch of potential LP commitments that need to be hard circled. But it should be pretty close. My initial thoughts were twofold: (1) That’s still a pretty good raise given fundraising market conditions, and (2) It means Blackstone will need to club up for those $10 billion+ mega-deals it likes to do (more Fidelity Nationals, fewer Hiltons).

On that second point, however, it’s worth noting that Blackstone and other mega-LBO firms will once again tap limited partners for big co-investments. And, from what I hear, LPs may be willing to once again participate (particularly those with co-invest allocations that have been mostly untouched for the past 18 months).

Probably helps that recent Q1 mega-buyout marks look particularly healthy, in part due to recent FAS 157-enabled valuation bumps (as opposed to smaller buyout portfolio companies, which often stayed marked-to-cost due to a lack of public comps). For example, Blackstone told people at last week’s annual meeting that Freescale could produce a 2x return. Pretty amazing for a portfolio company that most folks had written off…