In everything from solar yieldcos to oil & gas to midstream, there's an awful lot of money sloshing around.
From Barron's Penta:
Blackstone Group, the giant private-equity fund manager, is increasingly targeting wealthy individuals to invest in its offerings. Big institutional investors still provide the vast majority of capital for these alternative investments, but their commitments haven’t kept pace with fund-raising needs. That has prompted firms like Blackstone to go after well-heeled investors and their financial advisors to help fill the gap.
The shortfall has opened an opportunity for wealthy investors interested in diversifying their portfolios to include buyout, venture-capital, real estate, and various hedge funds. Account minimums have come down considerably to accommodate individuals, though the fees still make the funds pricey investments.
Blackstone’s (ticker: BX) efforts already are bearing fruit. The company says that roughly 12% of its $310 billion in assets under management comes from high-net worth investors, more than twice the 5% they provided in 2008. Carlyle Group (CG) and KKR & Co. (KKR) also are hunting for individuals’ money.
Overall, high-net-worth investors made up 10% of the money raised for private-equity funds closed between 2012 and 2014, versus 3% in 2009 to 2011, according to private-equity tracker Preqin. In contrast, public pension funds’ total contributions dropped from 28% to 22%. “I expect you’ll see a lot more coming in from individual investors,” said David Rubenstein, co-founder of Carlyle Group, on a recent conference call.
Blackstone reportedly raised a hefty $14.5 billion from institutional investors in less than four months for a popular real estate fund. But it also wants to sell an additional $1.3 billion of the fund to high-net-worth investors. It’s just the latest example of Blackstone’s efforts. Last year, it raised a total of $57 billion, with $11 billion coming from high-net-worth investors.
The strategy of reaching out to the wealthy began during the financial crisis when private equity stumbled, losing an estimated 30% to 40% in certain categories. Money raised for private-equity funds industrywide fell 57% between 2008 and 2010, according to Preqin. Even last year’s $539 billion in funds raised fell well short of the precrisis high of $688 billion....MORE
