NPS to put $440 mn in Blackstone’s $5 bn core fund

Jul 11, 2016 (Gmt+09:00)

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The National Pension Service (NPS) of South Korea will commit 500 billion won ($436 million) to a $5 billion private equity fund that Blackstone Group LP has been raising, an NPS source told the Korea Economic Daily on July 11.

The commitment is the NPS’ largest investment in a single offshore PEF, as the $450 billion pension fund is stepping up diversification into a broader array of alternatives, including hedge funds.

The NPS source confirmed a local media report about the investment, without elaborating. A South Korean newspaper, Financial News, said on July 10 that the new private equity fund of Blackstone has also attracted investments from California Public Employees’ Retirement System, China Investment Corporation, and pension funds of Texas and New Jersey, citing unnamed investment banking sources.

Last month Bloomberg reported that Blackstone was close to raising a $5 billion buyout fund designed to mimic the long-term, buy-and-hold strategy of Warren Buffett. The fund, which is set to be Blackstone’s first “core” private equity fund, will invest in individual companies for more than twice the typical three-to-five-year holding period, the news report cited an unnamed source with knowledge of the matter.

The Blackstone vehicle will have a 20-year lifespan, longer than the typical 10 years, and aim for an annualized net return of 15%. The firm will deploy the $5 billion in four or five deals, while investors pay an incentive fee of 10% of deal profits, half the percentage for investors in Blackstone’s main fund, according to the Bloomberg report.

Blackstone Chief Executive Officer Steve Schwarzman was also quoted as saying last April that the new fund was offered very selectively to sophisticated investors.