Blackstone Group is Busy With Capital Deployment

Blackstone Group investments are always an interesting subject.

The private equity and alternative asset management behemoth Blackstone has had a very successful fundraising year in 2019. Net inflows of investor capital were $20.4 billion in the quarter, bringing LTM inflows to $147.1 billion. Blackstone currently has more than $150 billion in dry powder to utilize across its private equity, real estate, credit, and special situations platforms.

Furthermore, the firm has been finding opportunities to deploy its cash. It now has several projects in the works that management feels can offer the high long term returns their investors are seeking.

A Breakdown of Blackstone Group Investments

On Monday, Blackstone announced that they are will investing $400 million in a joint venture with Swiss drug company Ferring. The venture will be working on an experimental gene therapy for bladder cancer. Ferring will be investing $170 million in the venture as well.

FerGene is also working to develop a gene therapy that treats aggressive forms of bladder cancer. Current treatment options are limited and include removal of the bladder. This will be the largest drug development deal Blackstone has ever done.

The firm is also bidding for Japanese hotel operator Unizo Holdings in a contest with several other bidders. Blackstone’s bid values the company at $1.6 billion. The company currently has the highest bid. Fortress Investment Group is bidding $1.3 billion. Officials at Unizo have also asked them to consider raising their bid to $1.6 billion.

Blackstone’s offer had expired, but they extended the offer to give management additional time to consider their deal.

Where the Company Invests Now

Meanwhile, Blackstone Infrastructure Partners has made a bid for the 44.2% stake in Tallgrass Energy that they do not already own. Tallgrass is an energy infrastructure company that owns transportation, storage, terminal, water, gathering, and processing assets in some of the leading oil and gas production fields in the United States. The Board of Directors is currently considering the offer.

Blackstone CEO Steven Schwarzman also discussed the difficulty of finding attractively priced deals on the most recent conference call with investors and analysts.

“In terms of the challenges, yes, I think obviously deployment is a question,” he said. “The good news is, it is a big investable world. We have lots of pools of capital, we have lots of geographies we can invest in, but that’s always a challenge, particularly in things that are more fixed income-oriented. So in infrastructure and real estate, there’s probably – makes it a little bit harder to deploy capital at times, although, as I said earlier, our scale has proven again and again to be a real advantage for us.”

Fundraising for Blackstone Group

Meanwhile, fundraising will continue at Blackstone, so the cash will continue to pile up. In addition, Blackstone is selling its remaining holding in single-family rental company Invitation Homes (INVH) for another $1.7 billion. As the cash levels build and valuation multiples remain high, it will be increasingly difficult to put the money to work in opportunities priced to provide the level of returns their investors have received in the past.

By: Tim Melvin

Related: Blackstone Group is Getting into the Dating Game