Blackstone Group is talking to its biggest investors to create a
"coalition of the willing" that can buy control of large companies
outside of its funds, according to Joe Baratta, head of private
equity at the New York-based firm.
Blackstone usually buys control of companies through its main
private-equity fund. It is talking to a select group of large
investors who may want to own a company for longer than the usual
term of private-equity ownership of five to 10 years and target
lower returns.
Mr. Baratta likened the potential new approach to the style of
Warren Buffett, whose Berkshire Hathaway Inc. doesn't have a time
limit on its investments because it doesn't buy assets through a
fund.
"I don't know why Warren Buffett should be the only person who
can have a 15-year, 14% sort of return horizon," Mr. Baratta said
at the Super Return private equity conference in Berlin.
Several large private equity groups recently started exploring
ways to buy big companies in partnership with large investors
outside their existing funds. The potential new approach comes as
major institutional investors, such as pension funds and
sovereign-wealth funds, who are clients of the big private-equity
groups look for steady returns in an environment of persistently
low global interest rates.
On Tuesday, TPG Capital co-founder Jim Coulter said the private
equity industry is in a period of "titanic shifts" as investors
look for new ways to buy companies. Mr. Coulter said the share of
companies bought through fund structures likely will decrease as a
result.
Blackstone's Mr. Baratta said his firm is working out how to
create "a coalition of the willing who we'd put together to own an
asset for a very long time."
A model for the new approach is the $23 billion purchase of H.J.
Heinz Co. by 3G Capital and Mr. Buffett's Berkshire Hathaway Inc.
3G didn't use a fund to invest and invited Mr. Buffett to
participate in the takeover. 3G and Berkshire Hathaway aren't under
pressure to sell Heinz within a set time period to earn a
return.
"There are clearly assets like Heinz" and other consumer goods
companies, as well as infrastructure assets, that a Blackstone-led
coalition could target, Mr. Baratta said.
"It opens up a whole universe of opportunities that we're not
currently accessing," he said.
Write to Simon Clark at simon.clark@wsj.com
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