Blackstone combines internal units as it sets sights on ‘next $1tn’

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Blackstone will combine its insurance and credit businesses, signalling that the world’s largest alternative asset manager considers its growth prospects in the decade ahead lie away from the traditional private equity buyout and real estate businesses that have long been its cornerstone.

Chief executive Steve Schwarzman said on Wednesday that the integrated unit, simply known as Blackstone Credit & Insurance, could grow to manage $1tn in the next 10 years, up from $295bn today. That would give the company its next big target after revealing in July its assets hit $1tn for the first time.

Combined, the business lines have been Blackstone’s fastest growing over the past three years: the company has reported $64bn of inflows into the units in the year to June, accounting for two-fifths of the firm’s overall fundraising haul in the period.

Blackstone’s combination of its credit and insurance businesses comes as it and other private equity players including Apollo Global Management, KKR and Brookfield prioritise debt-based investments as a source of asset growth in a rising interest rate environment.

Last year, Apollo completed its acquisition of Athene — a life and annuities insurer it created in the wake of the 2008 financial crisis — as chief executive Marc Rowan prioritised credit investments as the group’s primary source of growth. Apollo’s credit arm manages hundreds of billions in insurance assets that the group owns directly after the merger.

KKR and Brookfield have also bought large insurers in recent years in an effort to grow their assets.

Blackstone has taken a different approach. Instead of buying outright, it has struck partnerships with several large insurers including AIG and Allstate, where it provides asset management services to their policies.

With these new credit and insurance assets, private equity firms have begun to position themselves as an alternative to the traditional banking system, possessing the capacity to make large multibillion-dollar corporate loans and to originate securitised assets like rental equipment and aircraft loans.

The naming of a new leader for the combined business also underscored Blackstone’s continued shift by its credit unit away from its distressed debt investing roots.

The company said the head of its insurance operations, Gilles Dellaert, would lead the combined unit. Dellaert joined Blackstone in 2020 from reinsurance heavyweight Global Atlantic — a company that KKR bought a majority stake in 2021 as it sought to supercharge its own insurance operations. Before that he held positions at Goldman Sachs and JPMorgan Chase.

Dwight Scott, a veteran Blackstone executive who led the credit business, was named chair of the new unit. Scott’s tenure in the unit dates back to 2005, when the business was known as GSO Capital Partners. Blackstone acquired the business, known for its canny wagers in credit markets, in 2008.

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