Written by Ian Withers
LONDON (Reuters) – Blackstone's private wealth business plans to enter at least two new European markets next year to tap growing demand among wealthy individuals, two company executives told Reuters. told.
New York-based Blackstone has made attracting capital from wealthy individuals a key priority in volatile market conditions and as private equity firms seek to diversify their client base away from institutional investors.
Blackstone's European Assets business currently has offices in London, Paris, Zurich, Milan and Frankfurt. The company did not say which new markets it would enter.
Blackstone's wealth products have minimum investment thresholds of $10,000 to $25,000.
Globally, the firm's private wealth assets have grown from $103 billion in 2020 to approximately $250 billion today, representing 23% of Blackstone's total assets of $1.1 trillion. Blackstone declined to discuss the value of its assets in Europe.
Navigating the fragmented European market and myriad regulatory regimes presents challenges. France and Italy are Blackstone's biggest growth markets for wealth, while growth in the UK is slowing, executives said.
“This is not the United States of Europe. It's much more complicated, and I think [Blackstone] We understand that,” said Rashmi Madan, head of Europe, Middle East and Africa (EMEA) for Blackstone’s Private Wealth Solutions Group.
However, Madan said regulatory changes to encourage individual investment in private markets across Europe, including the UK, were a “positive sign”. “There is a shift in Europe where long-term investment is important.”
Mr Madan said the UK had become a core market for wealth businesses, despite an increase in the number of very wealthy people moving to other countries since the 2016 Brexit vote. He was speaking ahead of last week's UK budget announcement, which included some tax increases on the wealthy. Blackstone declined to comment on the budget.
To support its expansion, Blackstone promoted Sheila Rapple to chief operating officer, EMEA wealth, and relocated from New York to London in October.
“I think there's a huge opportunity,” Rapple told Reuters, referring to Europe.
Turn into cash
Blackstone is pinning its wealth growth hopes on a wide range of semi-liquid “evergreen” funds designed for individual investors, spanning private equity, credit and real estate. It plans to launch two new funds in credit and infrastructure early next year, starting in the US.
The company's products are typically sold to wealthy individuals through partnerships with local banks and wealth management companies such as French lender BNP Paribas and Italian insurer Generali.
Entering private markets exposes individual investors to assets that are illiquid and difficult to value.
Blackstone restricted clients from withdrawing money from its flagship $55 billion real estate fund, BREIT, for more than a year until February, as investors considered exiting amid the global commercial real estate recession.
Madan said Blackstone's retail funds typically have a one- to two-year “soft lock” that allows investors to cash out after paying a penalty, and then either monthly or monthly, depending on fund-level caps. It is said that exits can be made quarterly.
This is a signal to investors that the fund is semi-liquid and “you're essentially investing in a private market,” he said.
(Reporting by Iain Withers; Editing by Tommy Reggiori Wilkes, Susan Fenton and David Goodman)