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What’s Behind Blackstone’s $20B Fund?

For the firm that’s a big wheel in hedge funds and private equity, what’s the deal with The Blackstone Group, which appears poised to create the first $20 billion fund?


For the firm that’s a big wheel in hedge funds and private equity, what’s the deal with The Blackstone Group, which appears poised to create the first $20 billion fund? The Wall Street Journal suggests that Blackstone’s decision to reopen its $15.6 billion p.e. fund to attract another $5 billion is part of the ever-accelerating trend to private-equitize corporate America. Just look at the p.e. activity: 15 of 20 of the biggest buyouts in history have occurred in the past year and a half, and p.e. firms account for 17% of all the big M&A deals. These huge funds have given firms unprecedented buying power to acquire almost anything their corporate hearts desire, expanding their horizons even more by joining hands in so-called “club deals.” For Blackstone, those deals may be the rub. According to PrivateEquityOnline, the firm has a distaste for such joint ventures. “Blackstone is smarting because it cannot invest enough equity and has to syndicate,” an unnamed investor told PEO. It’s not that the firm is anti-social. “Blackstone does not like club deals, particularly in the context of the current investigation by the U.S. Department of Justice for collusion among the mega funds.” Blackstone, which did not comment to PEO, thus appears to have taken to makin’ its own mega fund. When the behemoth offer first launched last year, it had relatively modest goal of $9 billion, which quickly jumped to $12.5 billion in June 2005. The rest is history in the making.

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