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Blackstone (Finally) Closes Record Fund

The Blackstone Group has completed the largest – and one of the longest – fundraising drives in private equity history, by closing its fifth fund with $21.7 billion in capital commitments. Thank goodness, because my regular queries to Blackstone reps had become a variation of the tiresome “Are we there yet.”

Blackstone began raising this fund way back in 2004 with a $10 billion target. Seems modest now, but at the time would have been the largest fund ever raised. Not long after, a fundraising arms race began. The Carlyle Group in March 2005 secured a combined $10.05 billion for its North American and European funds, and I joked that Schwarzman would probably ask LPs for an extra $600k. But I underestimated Blackstone, which soon gathered $12 billion. What Blackstone didn’t do, however, was hold a final close.

Instead, the firm decided to push off the end-date to Q3 2006 – as deal opportunities continued to get larger. It had $15.6 billion by last fall, and asked its LPs for feedback on additional fundraising. Reports at the time suggested that Blackstone was looking to settle on an even $20 billion, but sources said that such speculation was premature. 

The next info nugget came this past March, when Blackstone’s IPO filing indicated that the fund had grown to $19.6 billion. Soon after, Buyouts Magazine reported that everything would be wrapped up by the end of July on around $22 billion.

Which brings us to today, and the $21.7 billion final close. It is the largest single fund ever raised – topping a $20 billion Goldman Sachs vehicle that was partially raised from firm employees. It might also be a short-lived respite for Blackstone’s fundraisers, as the fund is already 2/3 committed to closed and pending deals. Among them are Biomet, Center Parcs, Michaels Stores, Freescale Semiconductor, Alliance Data Systems and Hilton Hotels.