Blackstone Expands European Wealth Business

By Iain Withers

LONDON (Reuters) – Blackstone (NYSE:BX)'s private wealth business plans to enter at least two new European markets next year to tap growing demand among the affluent, as executives disclosed to Reuters.

New York-based Blackstone has prioritized attracting funds from wealthy individuals amid uncertain market conditions and aims to diversify its client base from institutional clients.

Currently, Blackstone's European wealth business operates in London, Paris, Zurich, Milan, and Frankfurt but did not specify which new markets it will enter.

The wealth products offered by Blackstone require a minimum investment of between $10,000 to $25,000.

Blackstone's private wealth assets have surged globally to about $250 billion from $103 billion in 2020, representing 23% of its total $1.1 trillion in assets. However, the company refrained from revealing the value of its European wealth assets.

The complex regulatory environment in fragmented European markets has posed challenges. France and Italy have been significant growth markets for Blackstone, while the UK has been slower in expansion, according to the executives.

"This is not the United States of Europe. There's much more complexity, and I think [Blackstone] understands that," commented Rashmi Madan, head of EMEA in Blackstone's private wealth solutions group.

Madan noted that regulatory changes across Europe, including in Britain, aim to promote retail investing in private markets, which are seen as a "positive sign." She emphasized that there is a growing recognition in Europe of the importance of long-term investing.

Despite a shift of affluent individuals from Britain post-Brexit in 2016, the UK remains a crucial market for Blackstone's wealth business. This comes as Britain ranked taxes on the wealthy were raised following the budget announcement last week, which Blackstone has chosen not to comment on.

To facilitate growth, Blackstone promoted Sheila Rapple to chief operating officer for EMEA wealth, who recently moved from New York to London.

Rapple expressed her optimism, stating, "I think there's massive opportunity," regarding the European market.

Cashing Out

Blackstone's strategy for wealth expansion relies on semi-liquid 'evergreen' funds designed for retail investors, covering private equity, credit, and property. The firm plans to launch two new funds in credit and infrastructure early next year, starting in the U.S.

Typically, these products are sold to wealthy individuals through partnerships with local banks or wealth managers, such as BNP Paribas and Generali.

Investing in private markets exposes retail investors to illiquid and complex assets. Blackstone previously restricted withdrawals from its $55 billion 'BREIT' property fund for over a year until February, due to investor exodus amid a global commercial real estate downturn.

The retail funds normally have a one or two-year 'soft lock' period, allowing investors to exit with a penalty fee, with subsequent exits available monthly or quarterly, depending on fund-level limits, according to Madan. This setup signals to investors the illiquidity associated with investing in private markets.