Blackstone‘s Private Wealth Business BX plans to enter at least two new European markets next year to capitalize on growing demand among the wealthy, two company executives told Reuters.
New York-based Blackstone has made attracting money from wealthy individuals one of its top priorities as market conditions are volatile (link) and private equity firms seek to diversify their client base away from institutional clients.
Blackstone’s European asset management business currently has offices in London, Paris, Zurich, Milan and Frankfurt. The company declined to say what new markets it would enter.
Blackstone’s Wealth products have a minimum investment threshold of $10,000 to $25,000.
The company has grown its global private assets from $103 billion in 2020 to $250 billion currently, representing 23 percent of Blackstone’s total assets of $1.1 trillion. Blackstone declined to disclose the valuation of its assets in Europe.
Navigating the fragmented European market and its myriad regulatory regimes presented challenges. France and Italy were Blackstone’s biggest wealth growth markets, while Britain made slower progress, executives said.
“We’re not in the United States of Europe here. There’s a lot more complexity, and I think [Blackstone] is aware of this,” said Rashmi Madan, head of Europe, the Middle East and Africa (EMEA) in Blackstone’s private wealth solutions group.
But regulatory changes across Europe – including the UK (link) – to encourage retail investment in private markets are a “positive sign”, Madan said. “There is a growing recognition in Europe that long-term investments are important.”
Britain is a core market for the wealth business, although more and more very wealthy people have been moving to other countries since the Brexit vote in 2016, Madan said. She was speaking ahead of last week’s UK budget announcement (link), which increased some taxes on the rich. Blackstone declined to comment on the budget.
To help grow the business, Blackstone has promoted Sheila Rapple to chief operating officer for EMEA Wealth, relocating from New York to London in October.
“I think there is tremendous opportunity here,” Rapple told Reuters, referring to Europe.
CASHING OUT
Blackstone is pinning its hopes on a series of semi-liquid “evergreen” funds for retail investors covering private equity, credit and real estate. Early next year, Blackstone will launch two new funds in credit and infrastructure, initially in the United States.
The products are usually offered through partnerships with local banks or asset managers such as the French lender BNP Paribas (link) BNP and the Italian insurer Generali (link) G sold to wealthy individuals.
Purchasing in private markets exposes retail investors to illiquid and difficult-to-value assets.
Blackstone restricted client withdrawals (link) from its $55 billion flagship real estate fund BREIT for over a year until February this year, as investors sought an exit amid a global commercial real estate slump.
Blackstone’s mutual funds typically have a one- or two-year “soft lock” period during which investors can exit by paying a penalty fee; thereafter, they can exit monthly or quarterly, subject to fund-level caps, Madan said.
This signals to investors that the funds are semi-liquid and “they are effectively investing in private markets.”
