Wealth Management Giant Eyes European Expansion
Blackstone, a leading private wealth business, is set to venture into at least two new European markets in 2023, capitalizing on the growing demand from high-net-worth individuals. This move is part of the company’s strategy to diversify its client base beyond institutional investors and navigate the current market volatility.
A Key Priority
Attracting funds from wealthy individuals has become a top priority for Blackstone, particularly in the face of uncertain market conditions. The company’s European wealth business currently operates in major hubs such as London, Paris, Zurich, Milan, and Frankfurt, with plans to expand its footprint further.
Growth Ambitions
Blackstone’s wealth products, which come with a minimum investment threshold of $10,000 to $25,000, have seen significant growth globally. The business has amassed around $250 billion in assets, up from $103 billion in 2020, accounting for 23% of Blackstone’s total $1.1 trillion in assets.
Europe: A Complex yet Promising Market
While navigating Europe’s fragmented market and regulatory regimes poses challenges, Blackstone remains optimistic about the region’s potential. France and Italy have emerged as key growth markets, with Britain lagging behind. Regulatory changes across Europe, including in Britain, aimed at encouraging retail investing in private markets, are seen as a positive sign.
A Shift towards Long-term Investing
According to Rashmi Madan, head of Europe, Middle East, and Africa (EMEA) in Blackstone’s private wealth solutions group, there is a growing recognition in Europe of the importance of long-term investing. This shift in mindset is expected to drive demand for Blackstone’s wealth products.
Expansion Plans
To support its growth ambitions, Blackstone has appointed Sheila Rapple as chief operating officer for EMEA wealth. Rapple, who relocated to London from New York in October, believes there is massive opportunity in Europe. The company plans to launch two new funds in credit and infrastructure early next year, initially in the U.S.
Semi-liquid Funds for Retail Investors
Blackstone’s wealth expansion hopes are pinned on a range of semi-liquid ‘evergreen’ funds designed for retail investors, covering private equity, credit, and property. These products are typically sold through partnerships with local banks or wealth managers, such as BNP Paribas and Generali.
Managing Risk
Buying into private markets exposes retail investors to illiquid and difficult-to-value assets. To mitigate this risk, Blackstone’s retail funds come with a one or two-year ‘oft lock’, where investors can cash out if they pay a penalty fee, after which they can exit monthly or quarterly, subject to fund-level caps. This structure serves as a reminder to investors that they are investing in private markets.
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