Blackstone Group Inc. is planning to raise at least $5 billion for its second private equity fund focused on Asia, Bloomberg has learnt.
With this fund, Blackstone (BX) would more than double the size of its first Asia buyout fund, which closed at about $2.3 billion in 2018. According to the Bloomberg report, the US investment firm has started marketing the new fund to potential investors.
The coronavirus pandemic has opened up attractive deal opportunities, which has prompted Blackstone to raise ever-larger pools of capital. The firm joins KKR & Co., which is in the process of raising at least $12.5 billion for its next Asia fund. TPG, Warburg Pincus and Baring Private Equity Asia have also in recent years raised large amounts of money earmarked for investment in Asia.
Blackstone may increase the size of its latest vehicle depending on the level of demand in the coming months, according to the Bloomberg report. As it now raises new cash, about 66% of its 2018 fund has been invested so far. Blackstone is pursuing deals in Japan, Australia, Korea, and less mature markets like China and India where acquisitions for control account for only one-third of total deal-making.
The buyout giant is putting its bets on Asia amid expectations that the region will recover faster from the pandemic than the rest of the world. Deal flows have started to pick up and could accelerate going into 2021, as a number of frozen transactions amid the spread of COVID-19 are expected to come back.
Many of Blackstone’s current holdings are in the consumer, health care and technology industries, which have benefited this year from the consumer shift to online spending and rising demand for medical services.
Back in August, Blackstone announced plans to snap up Takeda Pharmaceutical’s over-the-counter drug business for 242 billion yen ($2.3 billion), its largest private-equity acquisition in Japan.
Meanwhile, BX stock has in recent weeks recouped all of this year’s earlier losses and is now up almost 5% since the beginning of 2020. Looking ahead, the average analyst price target of $61.21 indicates 4.4% upside potential is lying ahead over the coming year.
Oppenheimer analyst Chris Kotowski at the end of last month upgraded the stock to Buy from Hold with a $58 price target, following the company’s better-than-expected third quarter results.
“Fund performance was exceptional, helping to build the carried interest receivable, which bodes well for future earnings,” Kotowski commented in a note to investors.
The strong Q3 combined with the stock’s recent pullback makes it “much more compelling near term” and provides a good entry point, the analyst summed up.
Overall, BX scores a Moderate Buy analyst consensus which breaks down into 5 Buys versus 2 Holds. (See Blackstone stock analysis on TipRanks).
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