Blackstone eyes $12.5bn for Fund VI

The Blackstone Group will close its latest fund on about $12.5 billion, significantly lower than its original target of $20 billion.

Tony James, president and chief operating officer of Blackstone, said the firm “expects” to raise $12 billion to $12.5 billion in capital for Fund VI, which began fundraising in 2008.

“When we launched the fund, we thought it was going to be about $15 billion. [That target] got bigger over time. We basically stopped fundraising for a year during the [financial] crisis. There really was no point,” James told the investment board of the San Diego County Employees Retirement Association at a meeting earlier this month. SDCERA committed $100 million to the fund, which is slated to close in June, according to an article from Dow Jones.

Tony James

The firm had collected $9.5 billion as of March 2010. Blackstone V closed on $21.7 billion in 2006.

According to fund documents, the fund will have a 1.5 percent management fee on commitments up to $7.5 billion, 1 percent of commitments above $7.5 billion, and afterward, .75 percent of invested capital. The firm will take a 20 percent carry, and distributions will be deal by deal.

Management fees in the fund will be reduced by 65 percent of transaction fees, the firm said in the documents.

The fund will target investments in buyouts of mid-sized companies, investing in new or undercapitalised financial institutions, distressed situations including distressed debt and Asian growth investments particularly in China and India.

The amount of equity the firm uses in deals varies, but on average Blackstone’s prior fund five used $403 million in equity on deals, with a range of $10 million to $1.5 billion.