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57-536: Blackstone Inc. is an American alternative investment management company based in New York City . It was founded in 1985 as a mergers and acquisitions firm by Peter Peterson and Stephen Schwarzman , who had previously worked together at Lehman Brothers . Blackstone's private equity business has been one of the largest investors in leveraged buyouts in the last three decades, while its real estate business has actively acquired commercial real estate across

114-546: A fund of hedge funds business to manage internal assets for Blackstone and its senior managers. This business evolved into Blackstone's marketable alternative asset management segment, which was opened to institutional investors. Among the investments included in this segment are funds of hedge funds, mezzanine funds , senior debt vehicles , proprietary hedge funds and closed-end mutual funds . Alternative investment An alternative investment , also known as an alternative asset or alternative investment fund ( AIF ),

171-521: A holding company . In 1991, Blackstone created its Europe unit and launched its real estate investment business with the acquisition of a series of hotel businesses under the leadership of Henry Silverman . In October 1991, Blackstone and Silverman added Days Inns of America for $ 250 million. In 1993, Hospitality Franchise Systems acquired Super 8 Motels for $ 125 million. Silverman would ultimately leave Blackstone to serve as CEO of HFS, which later became Cendant Corporation . Blackstone made

228-519: A $ 1.1 billion real estate investment fund. Also in 1997, Blackstone made its first investment in Allied Waste . In 1998, Blackstone sold a 7% interest in its management company to AIG , valuing Blackstone at $ 2.1 billion. In 1999, Blackstone partnered with Apollo Management to provide capital for Allied Waste's acquisition of Browning-Ferris Industries . Blackstone's investment in Allied

285-504: A $ 3.5 million fee. From the outset in 1985, Schwarzman and Peterson planned to enter the private equity business but had difficulty in raising their first fund because neither had ever led a leveraged buyout. Blackstone finalized fundraising for its first private equity fund in the aftermath of Black Monday , the October 1987 global stock market crash. After two years of providing strictly advisory services, Blackstone decided to pursue

342-691: A cell phone operator in the Rocky Mountain states (CommNet Cellular) were among the most successful of the era, generating $ 1.5 billion of profits for Blackstone's funds. Blackstone Real Estate Advisers, its real estate affiliate, bought the Watergate complex in Washington D.C. in July 1998 for $ 39 million and sold it to Monument Realty in August 2004. In October 2000, Blackstone acquired

399-584: A critique was raised regarding a purchase agreement on several hundred apartments in Frederiksberg , Denmark, between Blackstone's Danish partner North 360 and Frederiksberg Boligfond, a nonprofit housing organization Frederiksberg Municipality established in 1930. After resistance by residents and questions about the purchase agreement's legality, Blackstone withdrew from it in October 2019. On December 1, 2022, Blackstone restricted withdrawals from its $ 125 billion real estate investment fund BREIT due to

456-587: A majority interest in Columbia House , a music-buying club, in mid-2002. Blackstone made a significant investment in Financial Guaranty Insurance Company (FGIC), a monoline bond insurer alongside PMI Group , The Cypress Group and CIVC Partners . FGIC incurred heavy losses, along with other bond insurers in the 2008 credit crisis. Two years later, in 2005, Blackstone was one of seven private equity firms involved in

513-582: A managing director of Lehman Brothers to join Peterson and Schwarzman at Blackstone in 1987, but left in 1992 to join the Clinton Administration as Deputy Treasury Secretary and later founded advisory investment bank Evercore Partners in 1995. Blackstone was originally formed as a mergers and acquisitions advisory boutique. It advised on the 1987 merger of investment banks E. F. Hutton & Co. and Shearson Lehman Brothers, collecting

570-480: A merchant banking model after its founders determined that many situations required an investment partner rather than just an advisor. The largest investors in the first fund included Prudential Insurance Company , Nikko Securities and the General Motors pension fund. Blackstone also ventured into other businesses, most notably investment management. In 1987 Blackstone entered into a 50–50 partnership with

627-465: A new fund as an independent entity backed by Blackstone. While Blackstone was active on the corporate investment side, it was also busy pursuing real estate investments. Blackstone acquired Prime Hospitality and Extended Stay America in 2004. Blackstone followed these investments with the acquisition of La Quinta Inns & Suites in 2005. Blackstone's largest transaction, the $ 26 billion buyout of Hilton Hotels Corporation , occurred in 2007 under

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684-537: A number of notable investments in the early and mid-1990s, including Great Lakes Dredge and Dock Company (1991), Six Flags (1991), US Radio (1994), Centerplate (1995), MEGA Brands (1996). Also, in 1996, Blackstone partnered with the Loewen Group , the second-largest funeral home and cemetery operator in North America, to acquire funeral home and cemetery businesses. The partnership's first acquisition

741-430: A resurgence in the retail asset class. The properties, which house tenants such as Patagonia and Amiri, were purchased with the strategy of increasing revenue by bringing below-market leases up to current rates. The deal included buildings at 61 Crosby Street, 72-76 Greene Street, 465 Broadway, and 415 West Broadway, demonstrating Blackstone's continued interest in prime urban retail locations. In 1990, Blackstone created

798-507: A start-up company if it grows to a large enough scale. The 2003 Capgemini World Wealth Report, based on 2002 data, showed high-net-worth individuals , as defined in the report, to have 10% of their financial assets in alternative investments. For the purposes of the report, alternative investments included "structured products, luxury valuables and collectibles, hedge funds, managed futures, and precious metals". By 2007, this had reduced to 9%. No recommendations were made in either report about

855-572: A surge in redemption requests from investors. The move caused investor consternation and limited the ability to attract new capital for BREIT. In November 2024, Blackstone made a significant move in Manhattan 's retail real estate market by acquiring a group of four retail buildings in Soho for approximately $ 200 million from ASB Real Estate Investments. This transaction marked the largest Manhattan retail deal by an investor in over three years, signaling

912-399: A tax-efficient way of investing in early-stage ventures. These work much like venture capital funds, with the added bonus of receiving government tax incentives for investing and loss relief protection should the companies invested in fail. Such funds help to diversify investor exposure by investing in multiple early ventures. Fees are normally charged by the management team for participating in

969-1042: A variety of strategies others offer only a specific type. In 2023, Blackstone , which specializes in only alternative investments including private equity, private debt, real assets, hedge funds, and hedge funds of funds, became the first alternative investment manager to reach $ 1 trillion in assets under management (AUM). Other notable alternative asset managers include Apollo , Brookfield , KKR , and Carlyle , each of which have hundreds of billions in AUM. As of 2023, traditional asset management companies had begun to offer alternatives including BlackRock , T. Rowe Price , and Franklin Templeton Investments . Liquid alternatives ("alts") are alternative investments that provide daily liquidity. Liquid alternative investments should produce returns uncorrelated to GDP growth, must have protection against systemic market risk and should be too small to create new systemic risks for

1026-461: Is German for "black"; "Peter", "Petros", or "Petra" (Πέτρος and πετρα, the masculine and feminine rendering of the word, respectively) means "stone" or "rock" in Greek. The two founders had previously worked together at Lehman Brothers . There, Schwarzman served as head of global mergers and acquisitions business. Prominent investment banker Roger C. Altman , another Lehman veteran, left his position as

1083-692: Is an investment in any asset class excluding capital stocks , bonds , and cash . The term is a relatively loose one and includes tangible assets such as precious metals , collectibles ( art , wine , antiques , vintage cars , coins , watches, musical instruments, or stamps ) and some financial assets such as real estate , commodities , private equity , distressed securities , hedge funds , exchange funds , carbon credits , venture capital , film production, financial derivatives , cryptocurrencies , non-fungible tokens , and Tax Receivable Agreements . Investments in real estate, forestry and shipping are also often termed "alternative" despite

1140-507: The Emory Center for Alternative Investments to provide research and a forum for discussion regarding private equity , hedge fund , and venture capital investments. In recent years, the growth of alternative finance has opened up new avenues to investing in alternatives such as the following: In a 1986 paper, William Baumol used the repeat sale method and compared prices of 500 paintings sold over 410 years before concluding that

1197-1198: The 2022 ranking, it regained the top spot in 2023, and retained it in 2024. The firm invests through minority investments, corporate partnerships, and industry consolidations , and occasionally start-up investments . The firm focuses on friendly investments in large capitalization companies . Blackstone has primarily relied on private equity funds , pools of committed capital from pension funds , insurance companies , endowments, fund of funds , high-net-worth individuals , sovereign wealth funds , and other institutional investors . From 1987 to its IPO in 2007, Blackstone invested approximately $ 20 billion in 109 private equity transactions. Blackstone's most notable investments include Allied Waste , AlliedBarton Security Services, Graham Packaging, Celanese , Nalco , HealthMarkets , Houghton Mifflin , American Axle , TRW Automotive , Catalent Pharma Solutions , Prime Hospitality, Legoland , Madame Tussauds , Luxury Resorts (LXR), Pinnacle Foods , Hilton Hotels Corporation , Motel 6, Apria Healthcare, Travelport, The Weather Channel (United States) and The PortAventura Resort . In 2009, Blackstone purchased Busch Entertainment (comprising

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1254-702: The Sea World Parks, Busch Garden Parks and the two water parks). In 2020 it acquired Ancestry.com . In 2012, Blackstone acquired a controlling interest in Utah-based Vivint, Inc. , a home automation, security, and energy company. Blackstone's most notable real estate investments have included QTS , EQ Office , Hilton Worldwide , Trizec Properties , Center Parcs UK , La Quinta Inns & Suites , Motel 6 , Wyndham Worldwide , Southern Cross Healthcare and Vicinity Centres . The purchase and subsequent IPO of Southern Cross led to controversy in

1311-581: The Singaporean sovereign wealth fund GIC . As part of the agreement, GIC secured a 35% stake in HIP, with the deal establishing a valuation exceeding €4 billion for the company. In December 2023, Blackstone announced its intention to divest its entire 23.59% stake, valued at $ 833 million, in Embassy Office Parks , India's largest real estate investment trust. The decision came four years after

1368-463: The UK. Part of the purchase involved splitting the business into a property company, NHP, and a nursing home business, which Blackstone claimed would become "the leading company in the elderly care market". In May 2011, Southern Cross, now independent, was almost bankrupt, jeopardizing 31,000 elderly residents in 750 care homes. It denied blame, although Blackstone was widely accused in the media for selling on

1425-474: The United States. The notion of “infrastructure as an asset class” has grown steadily in the past seven years. But, so far, this development has been the preserve of institutional investors: pension funds, insurance companies and sovereign wealth funds, with very limited access to high-net-worth investors (except a few large family offices ). Only available in the UK, SEIS funds and EIS funds present

1482-604: The acquisition was terminated in November 2010. In May 2023, Blackstone entered into an agreement to divest its stake in IBS Software, a Kerala-based software-as-a-service (SaaS) provider. The transaction, valued at $ 450 million, involved the sale of Blackstone's stake to the global private equity firm Apax . In October 2023, Blackstone divested its stake in the Spanish hotel conglomerate Hotel Investment Partners (HIP) to

1539-613: The adverse conditions of the early 2000s recession . At the end of 2002, Blackstone, together with Thomas H. Lee Partners and Bain Capital , acquired Houghton Mifflin Company for $ 1.28 billion. The transaction represented one of the first large club deals completed since the collapse of the Dot-com bubble . In 2002, Hamilton E. James joined Blackstone, where he serves as president and chief operating officer. He also serves on

1596-531: The amount of money investors should place in alternative investments. As of 2019, the global breakdown of financial assets included a 13% allocation to alternative investments. Alternative investments are sometimes used as a way of reducing overall investment risk through diversification . Some of the characteristics of alternative investments may include: Alternatives may be offered by traditional investment companies or specialized companies. Among companies which specialize in alternative investments, some offer

1653-399: The ancient use of such real assets to enhance and preserve wealth. Alternative investments are to be contrasted with traditional investments . As the definition of alternative investments is broad, data and research vary widely across the investment classes. For example, art and wine investments may lack high-quality data. The Goizueta Business School at Emory University has established

1710-605: The average real annual return on art was 0.55%. Another study of high-quality oil paintings sold in Sweden between 1985 and 2016 determined the average return to be 0.6% annually. However, art gallerists are sometimes ambivalent to the idea of treating artwork as an investment. Art is also notoriously difficult to value, and there are quite a few factors to bear in mind for art valuation . Equity crowdfunding platforms allow "the crowd" to review early-stage investment opportunities presented by entrepreneurs and take an equity stake in

1767-479: The business grew, Japanese bank Nikko Securities acquired a 20% interest in Blackstone for a $ 100 million investment in 1988 (valuing the firm at $ 500 million). Nikko's investment allowed for a major expansion of the firm and its investment activities. The growth firm also recruited politician and investment banker David Stockman from Salomon Brothers in 1988. Stockman led many key deals in his time at

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1824-470: The business. Typically an online platform acts as a broker between investors and founders. These platforms differ greatly in the types of opportunities they will offer up to investors, how much due diligence is performed, degree of investor protections available, minimum investment size and so on. Equity crowdfunding platforms have seen a significant amount of success in the UK and, with the passing of JOBS Act Title III in early 2016, are now picking up steam in

1881-400: The buyout boom period. Other notable investments that Blackstone completed in 2008 and 2009 included AlliedBarton , Performance Food Group, Apria Healthcare, and CMS Computers . In July 2008, Blackstone, NBC Universal, and Bain Capital acquired The Weather Channel from Landmark Communications for $ 3.5 billion. In 2015, the digital assets were sold to IBM for $ 2 billion. In 2018,

1938-412: The buyout of SunGard in a transaction valued at $ 11.3 billion. Blackstone's partners in the acquisition were Silver Lake Partners , Bain Capital, Goldman Sachs Capital Partners , Kohlberg Kravis Roberts , Providence Equity Partners , and TPG Capital . This represented the largest leveraged buyout completed since the takeover of RJR Nabisco at the end of the 1980s leveraged buyout boom. Also, at

1995-586: The company with an unsustainable business model and crippled with an impossible sale and leaseback strategy. After the 2007–2010 subprime mortgage crisis in the United States, Blackstone Group LP bought more than $ 5.5 billion worth of single-family homes to rent, and then be sold when the prices rise. In 2014, Blackstone sold Northern California office buildings for $ 3.5 billion. The buildings sold in San Francisco and Silicon Valley included 26 office buildings and two development parcels. In 2018,

2052-459: The complexity of liquid alts and the lack of able portfolio managers. One of the world's largest hedge fund managers, AQR Capital , began offering funds in 2009, and grew from $ 33 billion in assets under management (AUM) in 2010 to $ 185 billion in AUM in 2017 driven in part by marketing mutual-fund like products with lower fees. As of 2016, AQR Capital was the largest manager of liquid alts. Heartland Industrial Partners The firm, which

2109-575: The firm but had a mixed record with his investments. He left Blackstone in 1999 to start his own private equity firm, Heartland Industrial Partners , based in Greenwich, Connecticut . The firm advised CBS Corporation on its 1988 sale of CBS Records to Sony to form what would become Sony Music Entertainment . In June 1989, Blackstone acquired freight railroad operator CNW Corporation . That same year, Blackstone partnered with Salomon Brothers to raise $ 600 million to acquire distressed thrifts in

2166-424: The firm's executive and management committees, and its board of directors. In late 2002, Blackstone acquired TRW Automotive in a $ 4.7 billion buyout, the largest private equity deal announced that year (the deal was completed in early 2003). TRW 's parent was acquired by Northrop Grumman , while Blackstone purchased its automotive parts business, a major supplier of automotive systems. Blackstone also purchased

2223-520: The founders of BlackRock , Larry Fink (current CEO of BlackRock), and Ralph Schlosstein (CEO of Evercore ). The two founders, who had previously run the mortgage-backed securities divisions at First Boston and Lehman Brothers, respectively, initially joined Blackstone to manage an investment fund and provide advice to financial institutions. They also planned to use a Blackstone fund to invest in financial institutions and help build an asset management business specializing in fixed income investments. As

2280-413: The fund, Heartland Industrial Partners, over to his partners following his resignation as chairman of Collins & Aikman , which was a major investment for the fund that ended in bankruptcy. On March 26, 2007, federal prosecutors in Manhattan indicted Stockman in "a scheme ... to defraud Collins & Aikman's investors, banks and creditors by manipulating C&A's reported revenues and earnings." At

2337-735: The fund, and these can end up totaling anywhere between 15% and 40% of the fund value over the course of its life. Lease investing platforms provide investors with options to co-invest and have partial ownership in physical assets that earn lease income. Through these platforms, investors can have fractional ownership of a particular asset leased to an organization and earn fixed returns. Private equity consists of large-scale private investments into unlisted companies in return for equity. Private funds are typically formed by combining funds from institutional investors such as high-net-worth individuals, insurance companies, university endowment funds and pension funds. Funds are used alongside borrowed money and

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2394-515: The globe. Blackstone is also active in credit, infrastructure, hedge funds , secondaries, growth equity, and insurance solutions. As of May 2024, Blackstone has more than US$ 1 trillion in total assets under management , making it the world's largest alternative investment firm. Blackstone was founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman with US$ 400,000 (equivalent to $ 1.1   million in 2023) in seed capital . The founders derived their firm's name from their names: "Schwarz"

2451-451: The initial listing of the REIT, as revealed in a term sheet disclosed by Reuters . Blackstone operates through four primary departments: private equity ; real estate ; hedge funds ; and credit . As of 2019, Blackstone was the world's largest private equity firm by capital commitments as ranked by Private Equity International 's PEI 300 ranking. After dropping to second behind KKR in

2508-430: The market. Hedge funds may be included in this category; however, traditional hedge funds may have liquidity limitations, and the term is usually used for registered mutual funds which use hedge fund strategies such as long-short equity investments. Liquid alternatives became popular in the late 2000s, growing from $ 124 billion in assets under management 2010 to $ 310 billion in 2014. However, in 2015 only $ 85 million

2565-591: The midst of the savings and loan crisis . In 1990, Blackstone launched its hedge funds business, initially intended to manage investments for Blackstone senior management. That same year, Blackstone formed a partnership with J. O. Hambro Magan in the UK and Indosuez in France. Additionally, Blackstone and Silverman acquired a 65% interest in Prime Motor Inn's Ramada and Howard Johnson franchises for $ 140 million, creating Hospitality Franchise Systems as

2622-505: The money of the private equity firm itself to invest in businesses they believe to have high growth potential. Venture capital consists of private investments made into young start-up companies in exchange for equity. Venture capital funds are typically formed by drawing capital from seed money , or angel investors . Nowadays, crowdfunding is also used by start-up companies for capital. Accredited investors such as high-net worth individuals, banks, and other companies will also invest in

2679-495: The mortgage for 7 World Trade Center from the Teachers Insurance and Annuity Association . In July 2002, Blackstone completed fundraising for a $ 6.45 billion private equity fund, Blackstone Capital Partners IV, the largest private equity fund at that time. With a significant amount of capital in its new fund, Blackstone was one of a handful of private equity investors capable of completing large transactions in

2736-651: The possibility of creating a business development company (BDC), Blackridge Investments, similar to vehicles pursued by Apollo Management. Blackstone failed to raise capital through an initial public offering that summer and the project were shelved. It also planned to raise a fund on the Amsterdam stock exchange in 2006, but its rival, Kohlberg Kravis Roberts & Co., launched a $ 5 billion fund there that soaked up all demand for such funds, and Blackstone abandoned its project. In 2007, Blackstone acquired Alliant Insurance Services, an insurance brokerage firm. The company

2793-613: The remainder of the company was sold to Byron Allen for $ 300 million. In December 2009, Blackstone acquired Busch Entertainment Corporation from Anheuser-Busch InBev for $ 2.9 billion. In November 2013, Merlin Entertainments, owned in part by Blackstone Group, became a public company via an initial public offering on the London Stock Exchange . In August 2010, Blackstone announced it would buy Dynegy , an energy firm, for nearly $ 5 billion, but

2850-469: The same time, the Securities and Exchange Commission brought civil charges against Stockman related to actions he took while CEO of Collins & Aikman. Stockman suffered a personal financial loss, estimated at $ 13 million, along with losses suffered by as many as 15,000 Collins & Aikman employees worldwide. Stockman said in a statement posted on his law firm's Web site that the company's collapse

2907-494: The tenure of Hilton CFO Stephen Bollenbach . Extended Stay Hotels was sold to The Lightstone Group in July 2007 and Prime Hospitality's Wellesley Inns were folded into La Quinta. La Quinta Inns & Suites was spun out for IPO in 2014 and later acquired by Wyndham Hotels & Resorts . During the buyout boom of 2006 and 2007, Blackstone completed some of the largest leveraged buyouts. Its most notable transactions during this period included: In 2004, Blackstone had explored

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2964-758: The time of its announcement, SunGard was the largest buyout of a technology company in history, a distinction it ceded to the buyout of Freescale Semiconductor. The SunGard transaction is also notable for the number of firms involved, the largest club deal completed to that point. The involvement of seven firms in the consortium was criticized by investors in private equity who considered crossholdings among firms to be generally unattractive. In 2006, Blackstone launched its long/short equity hedge fund business, Kailix Advisors. According to Blackstone, as of September 30, 2008, Kailix Advisors had $ 1.9 billion of assets under management. In December 2008, Blackstone announced that Kailix would be spun off to its management team to form

3021-558: Was a $ 295 million buyout of Prime Succession from GTCR . In 1995, Blackstone sold its stake in BlackRock to PNC Financial Services for $ 250 million. Between 1995 and 2014, PNC reported $ 12 billion in pretax revenues and capital gains from BlackRock. Schwarzman later described the selling of BlackRock as his worst business decision ever. In 1997, Blackstone completed fundraising for its third private equity fund, with approximately $ 4 billion of investor commitments and

3078-486: Was added, with 31 closed funds and a high-profile underperformance by the largest long-short equity fund at the time, Marketfield Fund. In 2014 there were an estimated 298 liquid alternative funds with strategies such as long-short equity funds; event-driven, relative value, tactical trading (including managed futures), and multi-strategy. This number does not include option income funds, tactical shorting and leveraged indexed funds. There has been expressed skepticism over

3135-520: Was based in Stamford, Connecticut , terminated its registration with the SEC in 2013. The firm was founded in 1999 by former Reagan budget director David Stockman , Timothy Leuliette and Daniel Tredwell In 2001, the firm completed fundraising for its first and only private equity fund with approximately $ 1.4 billion of investor commitments. In 2005, it was reported that Stockman handed control of

3192-826: Was one of its largest at that point in the firm's history. In 1999, Blackstone launched its mezzanine capital business. It brought in five professionals, led by Howard Gellis from Nomura Holding America's Leveraged Capital Group, to manage the business. Blackstone's investments in the late 1990s included AMF Group (1996), Haynes International (1997), American Axle (1997), Premcor (1997), CommNet Cellular (1998), Graham Packaging (1998), Centennial Communications (1999), Bresnan Communications (1999), and PAETEC Holding Corp. (1999). Haynes and Republic Technologies International both had problems and ultimately filed bankruptcy. Blackstone's investments in telecommunications businesses—four cable TV systems in rural areas (TW Fanch 1 and 2, Bresnan Communications and Intermedia Partners IV) and

3249-510: Was sold to Kohlberg Kravis Roberts in 2012. On June 21, 2007, Blackstone became a public company via an initial public offering, selling a 12.3% stake in the company for $ 4.13 billion, in the largest U.S. IPO since 2002. During the 2007–2008 financial crisis , Blackstone closed only a few transactions. In January 2008, Blackstone made a small co-investment alongside TPG Capital and Apollo Management in their buyout of Harrah's Entertainment , although that transaction had been announced during

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