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Blackstone's latest fund close to $15 billion

NEW YORK (Reuters) - Blackstone Group's BX.N latest private equity fund will be close to $15 billion in size and will clock in as one of the largest raised in history, its chief operating officer said on Wednesday.

It is a rise from the $13.5 billion figure Blackstone previously disclosed.

“Considering that we started raising that after the meltdown, when there was essentially no fund-raising in the industry, and we got to a fund size of close on $15 billion by the time we’re done, it is a remarkable accomplishment,” said COO Tony James, speaking at a conference in New York that was webcast.

A slide on the company’s website to accompany James’ presentation said Blackstone raised over $14 billion for the fund, called BCP VI. In the presentation, James said the number will end up close to $15 billion.

It contrasts with its giant fifth fund, BCP V, a $21.7 billion monster it finished fund-raising in the summer of 2007, which is invested in companies such as Nielsen, Freescale Semiconductor and Hilton Hotels.

While the new fund is smaller, the previous one was raised over a period of three years, James said.

“I think at $15 billion, it’s still one of the top 5 or 6 funds in history and raised in a very difficult environment,” said James.

Private equity fund-raising fell off a cliff after the credit crisis and is slowly recovering, but it is not back to the levels of 2005-2007.

“I think you’ll see a lot of private equity funds having an extremely difficult time coming back with funds the same size,” James said.

Private equity firms raise capital from investors such as pension and endowment funds. They typically spend several years investing that capital by buying companies, with the aim of selling or floating those assets and generating an out-sized return.

Since the credit crisis squeezed investors, the time it has taken to raise funds has lengthened and the amount firms have been able to raise has slid.

EXCLUSIVE DEALS

Blackstone is ‘myopically focused’ on getting exclusive deals and is more focused on mid-market, smaller deals than large leveraged buyouts, James said.

The firm competes against rivals such as TPG Capital TPG.UL and Kolhberg Kravis Roberts & Co KKR.N, which have been looking at large targets such as Seagate Technology STX.O.

“We are a big fund but we are not focused on big deals ... we leave the big ego-grabbing deals for the most part to some of our competitors that have 3 initials,” James said. “We like to go where the competition is not ... We try to avoid auctions at all times.”

Blackstone is currently battling to buy power company Dynegy Inc DYN.N and on Tuesday raised its bid by 11 percent to about $602 million to try to gain enough shareholder support to get the deal through. A shareholder vote was recessed until next week.

James said that Blackstone is often misperceived to be just a private equity firm, but in reality is much broader with large real estate funds, an M&A and restructuring advisory business and a credit platform.

“Private equity is a good business, but it’s not our biggest business,” he said. “It’s not our most profitable business and it’s not our fastest growing business. So by almost any definition, private equity is not our best business and not even our core business.”

Reporting by Megan Davies; Editing by Robert MacMillan, Gary Hill

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