By Iain Withers
LONDON (Reuters) – Blackstone (NYSE:)’s non-public wealth enterprise plans to enter a minimum of two new European markets subsequent yr to faucet rising demand among the many well-off, two executives on the firm informed Reuters.
New York-based Blackstone has made attracting funds from rich people a key precedence amid uneven market circumstances and as non-public fairness companies look to diversify their shopper base away from institutional purchasers.
Blackstone’s European wealth enterprise at present has workplaces in London, Paris, Zurich, Milan and Frankfurt. It declined to say which new markets it could enter.
Blackstone’s wealth merchandise have a minimal funding threshold of $10,000 to $25,000.
The enterprise has grown its non-public wealth property globally to round $250 billion at present from $103 billion in 2020, or 23% of Blackstone’s whole $1.1 trillion in property. Blackstone declined to say the worth of its wealth property in Europe.
Navigating the fragmented European market and its myriad of regulatory regimes has posed challenges. France and Italy have been Blackstone’s largest development markets in wealth, with Britain slower going, the executives mentioned.
“This is not the United States of Europe. There’s much more complexity, and I think [Blackstone] understands that,” mentioned Rashmi Madan, head of Europe, Center East and Africa (EMEA) in Blackstone’s non-public wealth options group.
However regulatory adjustments throughout Europe – together with in Britain – to encourage retail investing in non-public markets have been a “positive sign”, Madan mentioned. “There’s a growing change in Europe… that long-term investing is important.”
Britain is a core marketplace for the wealth enterprise, regardless of a rising variety of very well-off individuals shifting elsewhere because the 2016 Brexit vote, Madan mentioned. She was talking forward of Britain’s funds announcement final week, which raised some taxes on the wealthy. Blackstone declined to touch upon the funds.
To assist broaden the enterprise, Blackstone has promoted Sheila Rapple to chief working officer for EMEA wealth, who relocated to London from New York in October.
“I think there’s massive opportunity,” Rapple informed Reuters, referring to Europe.
CASHING OUT
Blackstone is pinning its wealth growth hopes on a variety of semi-liquid ‘evergreen’ funds designed for retail buyers, spanning non-public fairness, credit score and property. It would launch two new funds in credit score and infrastructure early subsequent yr, initially within the U.S.
Its merchandise are usually bought to rich people by means of partnerships with native banks or wealth managers, resembling French lender BNP Paribas (OTC:) and Italian insurer Generali (BIT:).
Shopping for into non-public markets exposes retail buyers to illiquid and difficult-to-value property.
Blackstone restricted shopper withdrawals from its flagship $55 billion ‘BREIT’ property fund for over a yr till February this yr, as buyers seemed to exit amid a world business actual property stoop.
Blackstone’s retail funds usually have a one or two-year ‘delicate lock’, the place buyers can money out in the event that they pay a penalty payment, after which they’ll exit month-to-month or quarterly, topic to fund-level caps, Madan mentioned.
That could be a sign to buyers, she mentioned, “that this is an illiquid fund and you’re effectively investing in private markets.”
