Key Takeaways
- • Blackstone Inc. is considering abandoning a planned collateralized fund obligation (CFO) that would have raised roughly $3 billion in debt to return cash to investors, according to people familiar with the matter (Bloomberg).
- • The offering was backed by one of Blackstone's older secondaries funds holding about 700 underlying investments.
- • Blackstone struggled to find a buyer for the equity tranche, typically the riskiest portion of such structures, after spending months on the transaction.
- • The potential withdrawal highlights demand constraints for first-loss tranches in secondaries-backed fund financing, a relevant signal for LPs and secondaries managers.
Summary
Blackstone Inc. is weighing whether to abandon plans to raise about $3 billion of debt that would have allowed it to return some cash to investors, according to people familiar with the matter who asked not to be identified because the details are not public.
The transaction is a collateralized fund obligation tied to one of Blackstone's older secondaries funds. The underlying portfolio includes about 700 investments. Blackstone has spent months preparing the deal, but according to some of the people, the firm has had difficulty finding a buyer for the equity tranche, the most junior and typically riskiest slice of such offerings.
The situation underscores the challenge of placing first-loss exposure in fund-level financings, even when the collateral is a diversified secondaries portfolio. Whether Blackstone ultimately proceeds, restructures the deal, or scraps it remains unresolved in the reporting available.
The transaction is a collateralized fund obligation tied to one of Blackstone's older secondaries funds. The underlying portfolio includes about 700 investments. Blackstone has spent months preparing the deal, but according to some of the people, the firm has had difficulty finding a buyer for the equity tranche, the most junior and typically riskiest slice of such offerings.
The situation underscores the challenge of placing first-loss exposure in fund-level financings, even when the collateral is a diversified secondaries portfolio. Whether Blackstone ultimately proceeds, restructures the deal, or scraps it remains unresolved in the reporting available.
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