BLACKSTONE’S private wealth business plans to enter at least two new European markets next year to tap growing demand among the well-off, two executives at the company said.
New York-based Blackstone has made attracting funds from wealthy individuals a key priority amid choppy market conditions and as private equity firms look to diversify their client base away from institutional clients.
Blackstone’s European wealth business currently has offices in London, Paris, Zurich, Milan and Frankfurt. It declined to say which new markets it would enter.
Blackstone’s wealth products have a minimum investment threshold of US$10,000 to US$25,000.
The business has grown its private wealth assets globally to around US$250 billion currently from US$103 billion in 2020, or 23 per cent of Blackstone’s total US$1.1 trillion in assets. Blackstone declined to say the value of its wealth assets in Europe.
Navigating the fragmented European market and its myriad of regulatory regimes has posed challenges. France and Italy have been Blackstone’s biggest growth markets in wealth, with Britain slower going, the executives said.
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“This is not the United States of Europe. There’s much more complexity, and I think understands that,” said Rashmi Madan, head of Europe, Middle East and Africa (Emea) in Blackstone’s private wealth solutions group.
But regulatory changes across Europe – including in Britain – to encourage retail investing in private markets were a “positive sign”, Madan said. “There’s a growing change in Europe… that long-term investing is important.”
Britain is a core market for the wealth business, despite a growing number of very well-off people moving elsewhere since the 2016 Brexit vote, Madan said. She was speaking ahead of Britain’s budget announcement last week, which raised some taxes on the rich. Blackstone declined to comment on the budget.
To help expand the business, Blackstone has promoted Sheila Rapple to chief operating officer for Emea wealth, who relocated to London from New York in October.
“I think there’s massive opportunity,” Rapple said, referring to Europe.
Cashing out
Blackstone is pinning its wealth expansion hopes on a range of semi-liquid ‘evergreen’ funds designed for retail investors, spanning private equity, credit and property. It will launch two new funds in credit and infrastructure early next year, initially in the US.
Its products are typically sold to wealthy individuals through partnerships with local banks or wealth managers, such as French lender BNP Paribas and Italian insurer Generali.
Buying into private markets exposes retail investors to illiquid and difficult-to-value assets.
Blackstone limited client withdrawals from its flagship US$55 billion ‘Breit’ property fund for over a year until February this year, as investors looked to exit amid a global commercial real estate slump.
Blackstone’s retail funds typically have a one or two-year ‘soft lock’, where investors can cash out if they pay a penalty fee, after which they can exit monthly or quarterly, subject to fund-level caps, Madan said.
That is a signal to investors, she said “that this is an illiquid fund and you are effectively investing in private markets”. REUTERS
