Steve Schwarzman’s Blackstone Group, the world’s biggest private-equity firm, is aiming to be the biggest PE player in the energy business.
The buyout giant is ramping up a $3 billion energy-focused fund and has already raised $1 billion, sources said.
Blackstone is aiming to top targets set by rivals KKR and Apollo Global Management, which are also raising energy funds, according to Bloomberg News.
Since last year, Blackstone has been investing heavily in energy companies, fueling the need for a separate vehicle and its first energy fund. Roughly half the $6 billion in PE money Blackstone has invested since January 2010 has gone toward buying and building energy companies, including forming Alta Energy Partners to acquire and develop oil and gas assets in North America.
The firm can invest only a certain percentage of its $16 billion general private-equity fund into any one industry.
Blackstone investors, including state pensions, asked the firm to raise a dedicated energy fund to invest alongside its mainstream vehicle, a source said.
The power play is a departure for Blackstone, which is better known for buying and selling media companies and hotels, such as the Hilton chain.
While Blackstone may be experiencing more success in the energy sector than its peers, the publicly traded firm lately has been dealing with falling valuations and shrinking returns.
The $20 billion Blackstone V, one of the largest private-equity funds ever raised, is break-even through March 31. That performance ranks it in the bottom quarter of PE funds raised in 2006. Both Apollo and KKR raised funds that year and have fared better.
“There have been few realizations and we anticipate the fund will provide a nice return for investors,” a Blackstone spokesman told The Post.
Schwarzman’s team has been down a similar road before. In 2000, it was focused on media and raised a $2 billion communications fund.
The fund’s returns have been among the worst of all the private-equity funds raised that year, earning 1.2 times the money invested.