In the wake of recently raising tens of billions of dollars of capital with nontraded real estate investment trusts and business development companies, Blackstone Inc. is preparing to roll out new funds for financial advisors to sell to clients by 2025.
One will be an infrastructure fund and the other a credit fund, Blackstone executives said Thursday morning during a conference call with investors and analysts to discuss second quarter earnings.
"As we've been saying for some time, we believe flows in the wealth channel ultimately follow performance," said Jon Gray, president and chief operating officer. "We built the leading platform in our industry with over $240 billion and three large-scale perpetual vehicles. We have more in development, including two we plan to bring to market by early next year."
"First, an infrastructure vehicle that will provide investors access to the full breadth of the firm's strategies in this area, including equity, secondaries and credit," Gray said. "And second, a vehicle that will invest across our expansive credit platform. Our commitment to the $85 trillion private wealth market is stronger than ever."
Since entering the retail wealth channel directly with Blackstone branded products in 2017, the firm has seen incredible growth selling alternative investment products through financial advisors. Three of its funds for retail investors are: Blackstone Real Estate Income Trust Inc., or BREIT, which opened in 2017 and has $56.7 billion in assets; Blackstone Private Credit Fund, or BCRED, which launched in 2021 and has $67.9 billion in assets; and most recently, Blackstone Private Equity Strategies Fund, or BXPE, which opened this year and has $4.4 billion in assets.
BREIT has seen clients pull billions of dollars from the fund starting two years ago as investors and financial advisors were nervous about falling value of commercial real estate and rising interest rates. But, the REIT has recently seen investors slow down or lesson the amount of shares they want to sell back to the company.
"With a big name like Blackstone, it's easier for a broker-dealer or RIA to get behind that brand," said Brian King, Lodas Markets CEO. "They've been talking about two new funds to launch probably in early 2025, and they’re already the giant because of the capital they’re raising."
"Private credit has been the darling asset class of the alternative investments the past couple years, and adding another private credit fund is likely attractive to financial advisors," King added.
Nontraded REITs and BDCs are public companies but aren’t registered on any public exchanges and don’t trade. Financial advisors typically sell them to clients looking for steady yields.
Retail wealth management "is definitely an area of large-scale opportunity, and everybody in the industry is recognizing this now," Gray said. "Credit to our firm to get into this well before other people, to focus on financial advisors and their underlying clients... and creating these perpetual products that brought costs down very significantly from what had existed historically in nontraded REITs, nontraded BDCs."
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