Blackstone Inc is pursuing a sale process for more than $2 billion of private-fund stakes, according to people cited by the Financial Times. The New York-based alternative asset manager has been marketing a collateralized fund obligation that would assemble holdings in leveraged buyout funds and convert them into bonds for purchase by third-party investors, including insurance companies.
The proposed transaction is intended to produce cash for limited partners in a vehicle managed by Blackstone Strategic Partners, the company unit tasked with investing in funds run by other private equity groups. The arrangement would effectively package stakes in buyout funds into a securitized product and offer that product to capital market buyers.
Sources familiar with the discussions said Blackstone has not fully committed to the securitization and could instead pursue a conventional secondary sale of the underlying stakes. Those options remain under consideration as the firm weighs the best path to provide liquidity for the Strategic Partners investors.
The contemplated move comes amid a broader environment in which private equity firms are experiencing difficulty exiting portfolio companies and returning capital to investors. The Financial Times reported that the buyout industry is holding roughly $4 trillion of unsold assets, underscoring the liquidity pressure facing some private markets participants.
Industry observers quoted in the report pointed to particular challenges with investments made in the 2020 to 2022 period, when interest rates were near zero. Those vintages are cited as harder to offload, according to the same reporting.
At this stage, the proposal to securitize stakes into a collateralized fund obligation represents one possible mechanism to convert private-fund interests into tradable debt instruments. Any decision by Blackstone to move forward or to select an alternative route such as secondary-market sales would determine the ultimate structure and timing of liquidity for the Strategic Partners investors.