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Blackstone’s private credit fund for European retail investors gains traction
by Lisa Lee
Blackstone has been eyeing one of the world’s biggest pools of wealth — and after a slow start, the asset manager’s push to sell private credit to affluent Europeans is gaining traction.
Launched in the fall of 2022, Blackstone European Private Credit Fund (ECRED) initially languished. Not only was the economic outlook gloomy — due to Russia’s invasion of Ukraine and a potential energy crisis — but only those from the UK, Luxembourg and Switzerland were able to invest.
That has turned around, with the fund growing to EUR 759m this year. Moreover, each of the last three quarters has seen increased capital flows.
Blackstone has also been steadily expanding ECRED’s availability. The fund is now available to investors in six European countries, with Finland joining the ranks last month, and the firm has plans for more additions to its roster.
High-net-worth investors in Italy and France have been particularly attracted to the strategy of directly lending to European companies, according to people familiar with the matter who aren’t authorised to speak publicly.
“We have been at the forefront of expanding individual investors’ access to private credit in Europe, and have been encouraged by the growing demand,” said Rashmi Madan, head of EMEA for Blackstone Private Wealth Solutions. “It’s still early in our journey, but we are seeing positive momentum.”
ECRED total assets (€m)
We have been encouraged by the growing demand
Rashmi Madan
Head of EMEA
Blackstone Private Wealth Solution
The sum held by ECRED is still minuscule in comparison to the more than USD 50bn held by its US counterpart BCRED, which attracted billions per month soon after inception and helped propel Blackstone to become one of the dominant private credit firms in the market.
The US fund is a modified version of a BDC that allows up to 5% of redemptions of net asset value per quarter and has become the template adopted by the industry.
Unlocking Europe’s wealth for direct lending to highly leveraged corporations was always going to be tougher than in the US. There are many countries in Europe, which means asset management firms need to work through a patchwork of regulatory hurdles in order to offer their funds everywhere.
European investors also tend to be more conservative than their US or Asian peers, with many preferring to keep their savings in cash. Finally, individual investors in Europe do not have a history of investing in below-investment grade loans, as the region lacks leveraged loan mutual funds, similar ETFs or BDCs.
But the payoff could be enormous. There’s an estimated EUR 50tn of cash held by Europe’s most affluent people. Even attracting a tiny portion would translate into a huge source for fees and profits, and would validate the investment global firms are making in the region.
Other asset managers have followed suit since Blackstone launched ECRED. Goldman Sachs earlier this year launched its first European private credit fund (GSEC) for wealthy individuals, starting with EUR 500m in equity already lined up. Asset manager Carlyle also set up a semi-liquid European private credit strategy (ETAC).
As Blackstone looks to draw in investors, it can boast that ECRED has delivered an annualised net return of 11.7% since inception. “We want to build on our position as a first mover to broaden access and expand to more markets,” said Madan.
