The IPO involved selling a 12.3% stake for $4.13 billion, marking the largest U.S. IPO since 2002 according to Wikipedia.
KKR in 2010 (merger with listed vehicle),
The "Yield-Co" Trend: Many of these firms (e.g., Blackstone, Apollo, Ares) have also spun off portions of their credit or real estate businesses into separately traded entities. These are often structured as corporations to be more attractive to a different set of investors (e.g., BXSL - Blackstone Secured Lending Fund).
A long chat with DeepSeek (Chat GPT seems to be down). Around - LP/GP relationship and LP views on this new GP owner set where the team or trackrecord is still GP, just that the capital is now provided by shareholders. And they participate in fee and carry. Then the issue of sophisticated investors, to it:
Target Shareholder Base: The target buyers of stocks like BX are sophisticated institutional investors (pension funds, mutual funds, hedge funds, other asset managers) and high-net-worth individuals. These investors theoretically understand the business model and are capable of analyzing the long-term value through the volatility.
So the investors now seem to have a decision between investing as LP, or as a shareholder or both. But then they'll be participating in different asset classes, one is public, liquid, another is private equity illiquid.
Now looking at Blackstone as of Aug 2025 (18 years after its IPO) - Market Cap: $ 198 billion.
Year | Estimated Market Cap (USD) | |
|---|---|---|
| 2007 | ~31 B | |
| 2021 | 155 B | |
| 2022 | 89 B | |
| 2023 | 158 B | |
| 2024 | 209 B | |
| 2025 (mid) | ~185 B (Jul 1) / ~201 B (Jul 16) | |
| Aug 2025 | ~125 B | |
| Aug 2025 | ~210–211 B |
Summary Table: 2020–2024
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| Given that PE investors tend to be sophisticated investors but by bringing the GP in public markets, one wonders about the sophistication aspect, especially to appreciate the different fund journeys and the performance numbers that play out over the life of the fund rather than annual cycles of stock markets. | ||||||||||||||||||||||||||
| Perhaps at some time one wonders if new accounting standard is needed. |
Because GAAP doesn’t solve this, the major GPs have created custom reporting frameworks:
Blackstone: emphasizes Fee-Related Earnings (FRE) and Distributable Earnings (DE) in quarterly reports.
Apollo: focuses on Fee-Related Earnings plus Spread-Related Earnings (from insurance arm Athene).
KKR: publishes FRE and “After-tax Distributable Earnings.”
These non-GAAP disclosures are now the standard way analysts value the stocks — most will put EV/FRE multiples on them, not just P/E ratios.
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World's largest Alternative Asset Manager with USD 1.1 trillion AUM (Dec 2024). From AR:
. Our more than $1.1 trillion in Total Assets Under Management as of December 31, 2024 include global investment strategies focused on real estate, private equity, infrastructure, life sciences, growth equity, credit, real assets, secondaries and hedge funds.
As of December 31, 2024, we employed approximately 4,895 people, including our 254 senior managing directors, at our headquarters in New York and around the world.
Our four business segments are: (a) Real Estate, (b) Private Equity, (c) Credit & Insurance and (d) Multi-Asset Investing
(a) Real Estate, $315 billion, 835 emp - d has investments across the globe, including in the Americas, Europe and Asia. Our real estate investment teams seek to utilize our global expertise and presence to generate attractive risk-adjusted returns for our investors.
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Perpetual Capital -
Similar to open-ended funds but different in the following ways?
Differences from Traditional Mutual Funds (also open-ended)
Liquidity limits: Mutual funds (’40 Act funds in the U.S.) allow daily liquidity. Perpetual private funds like BREIT (Blackstone Real Estate Income Trust) or BCRED (Blackstone Private Credit Fund) restrict redemptions (e.g., 2–5% of NAV per quarter). This prevents a “run” on the fund.
Asset type: Mutual funds hold liquid securities (stocks, bonds).Perpetual private funds hold illiquid private assets (real estate, loans, infrastructure, PE stakes).
Valuation: Mutual funds are priced daily. Private perpetual funds mark assets quarterly (sometimes monthly), using appraisals or models — less frequent and more subjective.
| Feature | Hedge Funds (open-ended) | Blackstone Perpetual Vehicles (e.g., BREIT, BCRED) |
|---|---|---|
| Liquidity | Often monthly or quarterly, with notice | Redemption caps (“gates”) like 2–5% of NAV per quarter, to protect illiquid assets |
| Assets | Public & liquid (equities, derivatives, credit) | Illiquid private assets (real estate, private credit, infrastructure) |
| Valuation | Daily or monthly (mark-to-market) | Quarterly (appraisals, models) |
| Redemption Risk | Can handle faster redemptions due to liquid assets | Must restrict liquidity because underlying assets cannot be sold quickly |
| Investor Base | HNWIs, family offices, institutions | Broader: retail wealth channels (via advisors), institutions, insurers |
| Regulatory Structure | Often offshore LPs, UCITS, or ’40 Act structures | REITs (BREIT), BDCs (BCRED), insurance accounts, listed REITs (BXMT) |
y Differences vs. Hedge Fund FoHF
| Feature | Hedge Fund / FoHF | Blackstone Perpetual (BREIT, BCRED, etc.) |
|---|---|---|
| Mgmt Fee | 1–2% of NAV | 1–1.25% of NAV (BREIT/BCRED) |
| Incentive Fee | ~20% of profits over hurdle | 12.5–20% of profits over hurdle (BREIT = 12.5% >5% hurdle) |
| High-Water Mark | Standard feature | Equivalent “loss carryforward” provision |
| Liquidity | Quarterly, monthly for some | Capped (e.g., 2% NAV/month, 5% NAV/quarter for BREIT) |
| Crystallization | Quarterly/annually | On redemption or annually depending on vehicle |
Yes — Blackstone’s perpetual AUM vehicles do have profit-sharing and protections against double-charging (loss carryforwards / high-watermark equivalents), just like FoHFs. But:
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Incentive fees are usually lower (12.5% vs. 20%).
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Liquidity is far more restricted.
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The NAV is based on private market appraisals rather than liquid securities.
| Feature | Perpetual Capital | Permanent Capital |
|---|---|---|
| Structure | Evergreen funds (BREIT, BCRED) | Listed entities (BXMT), insurance AUM, GP stakes |
| Investor Redemption | Allowed, but gated (2–5% NAV per quarter) | Not allowed (investor capital stays put) |
| Fee Base | Very stable, but could shrink if redemptions persist | Truly locked-in; fee stream is indefinite |
| Examples @ Blackstone | BREIT (Real Estate), BCRED (Credit) | BXMT (Mortgage REIT), Insurance mandates (Corebridge, Everlake, etc.) |
Traditional Private Equity (Closed-End Fund) vs. Permanent Capital Vehicle
| Feature | Traditional PE Fund (Closed-End) | Permanent Capital Vehicle (e.g., insurance AUM, listed REITs/BDCs like BXMT, BCRED) |
|---|---|---|
| Fund Life | Fixed term (typically 10–12 years with 2–3 year extensions) | No maturity – indefinite horizon |
| Capital Commitments | LPs commit upfront, capital is drawn down (“capital calls”) over the investment period | Investors subscribe capital at inception (or continuously, if evergreen); no redemption rights in permanent structures |
| Investor Redemptions | None – LPs must wait for distributions (exits, sales, refinancings) | None – capital is “locked in forever” (in listed vehicles, investors can sell shares on exchange but can’t redeem at NAV) |
| Liquidity | Illiquid – LPs locked in until fund winds down (secondary market is only option) | Illiquid – no redemption; listed entities offer trading liquidity but not fund-level withdrawals |
| Management Fees | 1.5%–2% on committed capital during investment period, then on invested cost | Ongoing % of NAV or AUM (usually lower, ~1–1.5%); fees last forever |
| Carried Interest (Performance Fees) | Typically 20% of profits above a hurdle (8% IRR common); crystallizes at fund wind-down or deal realizations | Often structured more like an incentive fee on NAV growth or distributable earnings; perpetual accrual; for some insurance mandates, no carry, just management fees |
| High-Water Mark / Hurdle | Yes, fund-level hurdle (e.g., 8% IRR); high-water mark not needed since each fund is self-contained | Listed/perpetual vehicles may use annual hurdle rates (e.g., BREIT has 5% hurdle with 12.5% incentive fee); high-water mark or loss carryforward features apply |
| Earnings Profile for GP | Lumpy: fees steady, carry highly volatile (depends on exits) | Stable: perpetual fee income dominates; performance fees accrue gradually |
| Investor Base | Institutional LPs (pensions, sovereign wealth funds, endowments) | Public market investors (listed vehicles) + insurers’ general accounts (mandates) |
| Fundraising Cycle | Continuous fundraising every ~3–5 years for new vintages | No fundraising cycle – capital base is enduring |
| Alignment with GP Balance Sheet | GP typically commits 1–2% of fund to align with LPs | Minimal or none; GP may own sponsor stake in listed vehicle, but not required |
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