Blackstone Group Inc. executives think a global private equity fund gives the manager better flexibility to find attractive deals.
Blackstone's private equity business has amassed almost double the amount of capital it had a year ago. The firm's private equity group had $71.8 billion of dry powder as of Sept. 30, up from $40.5 billion a year earlier, according to its latest Securities and Exchange Commission 10-Q filing.
In the fourth quarter, Blackstone raised the largest-ever private equity fund, the $26 billion Blackstone Capital Partners VIII, a global fund that invests in the U.S., Europe and Asia.
Prakash A. Melwani, senior managing director and chief investment officer of the private equity group, said in an interview that the dry powder will better allow Blackstone to pursue its strategy of targeting larger deals where there is much less competition.
"We are finding the best investments globally," Mr. Melwani said.
Indeed, the types of investments that Blackstone Capital Partners VIII is focusing on include investments in Asian companies in which Blackstone has control as well as large-scale buyouts and cyclical energy dislocations, according to agenda materials for the Oregon Investment Council, an investor in the fund and member of the Blackstone Capital Partners Limited Partner Advisory Committee. The Tigard-based council runs the $77.2 billion Oregon Public Employees Retirement System, Salem.
"We found Asia has been very interesting in the last 12 months," Mr. Melwani said.
What's more, Blackstone has made some sizable investments in the U.K. in the last 12 months as well. One example is Blackstone's new investment in theme park company Merlin Entertainment, a £4.8 billion ($6.3 billion) transaction. Blackstone first invested in Merlin in 2005. The $6.8 billion Blackstone Capital Partners IV acquired the company from Hermes Private Equity for £102.5 million. Blackstone took the company public in 2013.
In the most recent Merlin transaction, announced in June, Blackstone Groups is part of a consortium that is taking Merlin private again and would take the amusement park company private at 455 pence per share, a 37% premium to the closing price on May 22.
Merlin was leveraged at 5.9 times earnings before interest, taxes, depreciation and amortization, Mr. Melwani said.
"But given the high quality of the asset which we know very well, some operational improvements that can be implemented in the very short term, and the irreplaceable hard assets that Merlin owns, we are very comfortable with that amount of leverage," he said.
— Arleen Jacobius
