Blackstone creates world's largest takeover fund

NEW YORK - Blackstone Group, the buyout firm co-founded by Peter G. Peterson and Stephen A. Schwarzman, raised US$12.5 billion ($18.3 billion) from investors to start the world's largest takeover fund.

Blackstone received commitments of US$11 billion for one fund, plus US$1.5 billion for a supplemental fund, according to a New Jersey state pension fund document and a person familiar with the New York-based firm.

The new fund eclipses Goldman Sachs Group's US$8.5 billion offering and the US$7.85 billion raised by Carlyle Group.

Buyout firms, which finance corporate takeovers mostly with borrowed money, disclosed US$148 billion of acquisitions during the first half of 2005, putting the industry almost 65 per cent ahead of 2004's record pace, data compiled by Bloomberg show.

"These very large firms are able to take on much bigger companies than they could before," said Nigel McConnell, managing partner of Electra Partners Europe, which closed a 1.25 billion ($2.7 billion) fund this week. "There's a huge amount of capital available."

Buyout firms are seeking a record US$200 billion this year for new funds, according to Private Equity Intelligence in London. Blackstone's last fund, raised in 2002, was US$6.45 billion.

Blackstone has made more than US$80 billion of acquisitions since the company was started in 1985 by Peterson and Schwarzman.

One of Blackstone's acquisitions is the Legoland theme parks from Denmark's Lego for US$457 million.

- BLOOMBERG