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July 12, 2018

Blackstone to close on $3bn for third energy fund

Alternative investment firm Blackstone Group has almost completed the first close for its third energy fund in a deal worth $3bn, reports suggest.

By Scarlett Evans

Alternative investment firm Blackstone Group has almost completed the first close for its third energy fund in a deal worth $3bn, reports suggest.

Predictions suggest that following the official closing of the round Blackstone Energy Partners III will be able to start actively investing in the fund. The target sum is $4.5bn, the same as the fund’s 2015 predecessor.

According to Bloomberg, the new fund will see a higher percentage of its own capital put to work on a per-deal basis than the previous fund. It will provide 70% of the capital for new deals, with Blackstone’s global buyout fund putting up the remaining amount.

A public filing released in June from the New Mexico State Investment Council, which committed $50 million Blackstone’s new pool, said the latest energy fund will aim to make 12 to 25 investments, a target which is the same as its predecessor. These will primarily be made in the North American energy exploration and power sectors.

The firm, which focuses its investments on oil and gas exploration, energy infrastructure and natural resources, closed its first dedicated energy fund in 2012.

Blackstone is the largest alternative investment firm in the world. Following the 2007 financial crisis, it took around four years for the company to raise the $16bn needed for a successor fund and since then it has been steadily strengthening its position and status across business lines through fundraising and other financial gains, seemingly undeterred by the unfavourable deal-making environment.

In the first quarter of 2018, its total assets under management reached a record $449.6bn, which the company said was a 22% rise from the same period from the previous year.

In June Blackstone closed a $5bn deal for an infrastructure fund, making it one of the biggest initial closes for a first-time fund across any alternative investment strategy, following SoftBank’s $100bn Vision Fund and the China Structural Reform Fund.

The company is now preparing to raise more than $20 billion for its eighth global buyout fund, following a prior buyout in 2015 of $18 billion.

 

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