Thoughts on new BX group?

@apollo95" Stonepeak was not so much a spinoff as it was Trent and Michael joining as a team from Macquarie with a cool opportunity to build out a dedicated industry vertical inside arguably the preeminent private equity platform, then feeling their strategy was a better fit as its own firm.

The logic in these kind of situations (building something out inside a big shop) is nothing other than mutualism. The joining partners want to continue the strength of their track record but inside a shop with a proven ability to drive asset inflow. The firm is happy to have competent people whose investment performance allows them to (you guessed it) raise more capital. The economics works for both parties; it's all incremental dollars relative to their prior situation.

Sometimes it doesn't work, however. It can be due to performance (sometimes the new guys joining end up following a thesis slightly different than where they'd previously proven themselves: this usually means they went further up the cap range), inability to attract supporting talent (you want the new partners to be coming over with VPs they've worked with; associates and analysts are easily winnable), or most unfortunately of all, a mismatch in LPs.

On that last one - sometimes when you're raising for a new vehicle you accept commitments from people who have been begging you to either get or upsize an allocation in your flagship strategy. They may be less familiar with the nuances of the new strategy (think private credit vs. private equity, infra vs. traditional buyout, etc.) but attracted to your brand-name logo, so boom, you have a commitment.

Over time though (slow markups leading to unattractive IRR figures, heavy capital calls with no distributions, whatever it may be), they get unhappy and signal an unwillingness to back a second or third vehicle in the strategy.

For the sake of all parties (manager, new partners who came on board, LP), it's sometimes smarter to dissolve the relationships ... let the industry guys go plant their own flag, the unhappy LPs don't participate in Fund I for the new firm, and the manager may retain a small stake in the new GP (especially if some of the LPs they sourced for the strategy when it was an in-house fund end up committing to the new firm's Fund I).

In this case (Blackstone's new behemoth fund) it looks like Blackstone tasted infra and liked it (the Bujagali hydro project went well, for instance), is comfortable with the talent at hand, and (this is complete conjecture) knew Steve's proximity to the Donald meant the political winds could blow in their favor to the tune of that flagship commitment from Saudi Arabia.