Blackstone raises $1bn in six months for Energy Transition IV

Blackstone is seeing fundraising accelerate for its private equity energy strategy. The firm has raised nearly $1 billion for Energy Transition Partners IV over the last two quarters, taking the fund’s total to $3.24 billion, according to the listed firm’s results statements.

The fund was launched in 2022 with a $6 billion target, an SEC filing from November 2022 showed. Ahead of a market-wide slowdown in fundraising in 2023, Blackstone expected to close BETP IV at its target by mid-2023, sources told affiliate publication Buyouts in 2022. But last summer, chief financial officer Michael Chae said the fund “will be probably $4 billion-plus” at final close.

Blackstone has seen strong fundraising momentum for its private credit energy strategy. Green Private Credit III, which invests in similar themes, closed on its $7.1 billion hard-cap in August 2023 and has deployed $1 billion so far.

Investors in BETP IV include: Teacher Retirement System of Texas, which has committed $200 million, the Minnesota State Board of Investment ($150 million), State of Michigan Retirement Systems ($100 million), Arizona State Retirement System ($100 million), Employees’ Retirement System of the State of Hawaii ($30 million) and San Francisco Employees’ Retirement System ($15 million).

BETP IV has a mandate to invest across the energy infrastructure spectrum, with a focus on the clean energy sector: clean power generation projects, companies providing technology, software and services to the energy sector, midstream oil and gas projects, electric transmission and energy efficiency projects. Blackstone excludes investing in upstream fossil fuel opportunities.

BETP IV is the successor to Blackstone Energy Partners III, which closed on $4.4 billion in 2020 and has deployed $2.8 billion. Despite the strategy’s rebrand for its latest vintage, BETP IV’s strategy will largely be consistent with BEP III, New Private Markets understands. Both funds are led by senior managing director David Foley, who has been at the firm for over 20 years.

BEP III generated a 33 percent net IRR in Q1 2024 and 34 percent net IRR in Q4 2023, according to the firms’ regulatory filings.

Blackstone has been “seeing a dramatic increase in demand from our clients” for energy transition infrastructure opportunities, president and COO Jon Gray reported in Blackstone’s Q1 2024 results call last week. “The need for capital around energy infrastructure is enormous. The needs for power, tied to digital infrastructure, but also electrification of vehicles, reshoring [are] very significant,” he added.