THE BIGGEST PE FUND

Blackstone just managed to close the largest PE fund ever at a record US$21.7 billion. In case you are wondering, only 80 countries in the world have a higher annual GDP! They seem to have tried really hard to be the biggest since first close was a year ago and they have kept the fund open for an extraordinarily long time. It feels like they have raised the capital some time ago and has been keeping the fund open so that they can one up Goldman and KKR. Why would one want to be the biggest and also the first to go public is beyond me. It certainly attracts negative publicity and all kinds of criticism. From my point of view, the right question to ask here is whether being big or public is in the best interest of the firm.

I work for a PE firm and have been in the industry for some time. Personally, I am neither a believer in “big is better” or going public is good for the firm. A bigger fund is by definition more difficult to invest and translates into lower return. How many great deals are there in the billion dollar range anyway? As for going public, it is great for making money but what about protecting the culture of a firm and having the flexibility of pursuing actions that are not popular with public market investors? I am poorer for it but am glad I don’t work at Blackstone.