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Blackstone turns to Canada’s wealthy to broaden BXPE’s reach

BNN Bloomberg is Canada’s definitive source for business news dedicated exclusively to helping Canadians invest and build their businesses.

(Bloomberg) -- Blackstone Inc. took in US$630 million from a fundraising effort that targeted wealthy Canadian investors, according to a person familiar with the matter, bringing assets in its first private equity fund for individuals to about $8.5 billion.

The total haul, disclosed Wednesday in a filing, is a reminder that the $1.1 trillion firm is a marketing machine. The money for the fund, known as BXPE, came from Royal Bank of Canada clients, said the person, who asked not to be identified because that information is private.

As the new fund has ballooned, Blackstone faces a high-class problem: how to manage its rapid growth.

Banks need assurances that their customers aren’t flooding a fund. The haul from RBC could address client questions around whether Blackstone is working to prevent the new fund’s investor base from being too concentrated among a few private banks.

RBC, with one of the largest networks of financial advisers in Canada, has been talking with money managers about ways to steer more clients into private markets. New York-based Blackstone structured the Canada offering of BXPE so clients could choose whether to have the investment in Canadian or US dollars.

“Canada may not be as big as the US, but it’s quite a large wealth market,” Joan Solotar, Blackstone’s global head of private wealth solutions, said in an interview. “You have very much an under penetration of individuals invested in private investments.”

Blackstone, meanwhile, is set to report fourth-quarter results before US markets open Thursday, when shareholders and competitors will be watching how the alternative asset manager is faring in diversifying its funding sources.

The firm’s biggest offering for individuals, the Blackstone Real Estate Income Trust, faces plateauing growth and slumping returns in muted property markets. That raises the stakes for other funds across the business to pull their weight.