Blackstone raises record sum for fund

Blackstone Group raised a record $21.7 billion for its latest private equity fund despite a debt slowdown that is endangering the boom in leveraged buyouts.

The amount raised is more than triple the $6.5-billion pool Blackstone raised five years ago and tops a $20-billion fund amassed by Goldman Sachs Group Inc. in April. “The record-breaking amount of capital at our disposal allows us to continue our leadership role in private-equity investing on a global basis,” Blackstone co-founder Stephen Schwarzman, 60, said in a statement.

Blackstone’s buyout funds have returned 23% a year on average after the firm’s fees. Blackstone’s assets under management rose to $88.4 billion May 1, up 12% from March 1.

The firm started to plan the fund, called Blackstone Capital Partners V, in 2004, and has committed to spend two-thirds of the money, helping fuel a record $707.8 billion in private equity transactions this year.

The pace of such deals has slowed by a third since June, as investors who had eagerly snapped up the debt used to fund leveraged buyouts suddenly became wary of it.

Companies bought or being acquired by the fund include Nielsen Co. and Hilton Hotels Corp. A private equity firm typically takes several years to invest the money in an individual fund.

“The credit markets may be shut for now, but they won’t be shut forever,” said Steven Kaplan, a professor at the University of Chicago who studies private equity. “The private equity firms have a ton of money, and they’re not going away.”

Shares of New York-based Blackstone, which went public in June, rose 37 cents, or 1.5%, to $25.27. The stock is off 18% from its $31-a-share initial public offering price.