Blackstone's (BX.US) global private wealth business expansion targets Europe! It plans to enter at least two new markets next year.

The two most senior executives at Blackstone Group (BX.US), the world's largest alternative asset manager, have revealed that the company's private wealth business plans to enter at least two new European markets next year to meet growing demand from the wealthy. Blackstone's private wealth business currently has offices in London, Paris, Zurich, Milan and Frankfurt, and declined to say which new European markets it will enter.

As private equity firms seek to diversify their client base away from institutions amid the current volatile market, Blackstone has made attracting wealthy individual investors a key priority. Its global private wealth management assets have grown from $103bn in 2020 to about $250bn, accounting for 23% of its total assets under management of $1.1tn.

The fragmented European market and its myriad of regulations has presented challenges for Blackstone. The company's executives said France and Italy have been the fastest-growing markets for its wealth business, while the UK market has grown more slowly.

Rashmi Madan, head of Blackstone's private wealth solutions group for Europe, the Middle East and Africa (EMEA), said: “It's much more complex now, and I think Blackstone understands that.” She added that regulatory reforms encouraging retail investors to invest in private markets across Europe — including the UK — was a “positive sign”, and that “Europe is changing more and more, and long-term investing is important”. She also noted that the UK was a core market for its wealth business, although more wealthy people have moved elsewhere since the UK's 2016 Brexit referendum.

Blackstone is pinning its wealth business expansion on a range of semi-liquid evergreen funds designed for retail investors, covering private equity, credit and real estate, among other areas. It will launch two new funds in the credit and infrastructure sectors next year, starting in the US. The company's products are typically sold to wealthy individuals through local banks or wealth managers such as BNP Paribas and Generali, the Italian insurer.

Investing in private markets products exposes retail investors to illiquid and hard-to-value assets. Ms Madan said that Blackstone's funds for retail investors typically have a one- or two-year “soft lock-up” period, during which investors can sell out with a penalty, after which they can exit on a monthly or quarterly basis, subject to fund-level caps. She said this was a signal to investors: “This is a non-liquid fund, you are actually investing in private markets”.