Blackstone has lined up about $25 billion in commitments to its secondaries strategy, underscoring investors' expectations of a long-term need for liquidity in a challenging exit environment.
The global private equity giant's Strategic Partners arm said Wednesday that it closed its Strategic Partners IX fund on $22.2 billion, making it the industry's single largest fund dedicated to helping limited and general partners offload assets on the secondary market.
That fund, along with Blackstone's existing $2.7 billion Strategic Partners GP Solutions vehicle, gives the firm plenty of firepower to provide investors with liquidity and diversification under its Strategic Partners unit, led by Verdun Perry, which now manages $67 billion in assets.
Secondary and GP-led continuation strategies are taking on growing importance as investors and GPs grapple with an increasingly difficult exit environment. PE exits in the US dropped from $876.7 billion in 2021 to $295.8 billion in 2022, according to PitchBook's 2022 Annual US PE Breakdown, as investors held onto assets longer to ride out rising inflation, geopolitical turmoil and public market volatility. At the same time, the IPO market almost completely dried up, with public listings accounting for only 2.5% of exit value last year.
The secondary market—specifically continuation vehicles and GP-led secondaries—offers alternative exit opportunities for GPs hoping to satiate investor demand for liquidity. A GP can retain an asset through a continuation vehicle by moving a trophy asset from one fund to another. In this type of transaction, LPs have the option to liquidate on the secondary market and GPs can retain the asset until the market becomes more favorable for a sale.
Blackstone didn't immediately respond to a request for comment.
New York-based Blackstone's newest fund is the industry's largest secondaries-focused vehicle since France's Ardian closed its Ardian Secondary Fund VIII on $19 billion in 2020, according to PitchBook data.
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This article originally appeared on PitchBook News
Blackstone raises over $22B for world's biggest secondaries fund
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