Blackstone's Hedge-Fund Business to Launch Growth Strategy
March 15 2021 - 8:30AM
Dow Jones News
By Juliet Chung
The world's biggest investor in hedge funds has hired former
hedge-fund manager Scott Bommer to launch a new growth strategy, a
move aimed at expanding Blackstone Group Inc.'s hedge-fund business
with offerings intended to generate big returns for clients.
The Blackstone Horizon platform, to be run by Mr. Bommer, will
thematically invest in money managers focused on fast-growing
public and private companies, Blackstone said. Horizon also will
invest directly in stock markets.
The main fund of hedge funds at the Blackstone business had
missed out on some of the rich returns coming from growth investing
in recent years because its conservative, low-volatility approach
aims to hedge clients' portfolios. Blackstone in January hired
former Brown University endowment chief Joe Dowling to run its
hedge-fund business with John McCormick, saying at the time that
his hire signaled a new focus on hedge funds as vehicles that can
generate big returns and withstand volatility.
Mr. Bommer, 54 years old, is Mr. Dowling's first hire. The
private-equity firm broadly has been pushing to invest more in
fast-growing companies and recently has taken stakes in the owner
of dating app Bumble and Swedish oat-milk maker Oatly AB.
"There's big opportunity with the disruption that's going on as
tech now permeates all these different industries," said Mr.
Bommer, who previously headed New York-based SAB Capital Management
for 17 years before shutting it in 2015 to manage his own
money.
Mr. Bommer is in charge of building a team for Horizon.
Blackstone said eight managers have already been selected for the
platform, two of whom are women, a high proportion in a
male-dominated industry.
Mr. Bommer said Blackstone's deep partnerships with hedge-fund
managers will help it access top investors and their best
co-investment ideas in private companies poised to go public, a
model Mr. Dowling employed at Brown. Mr. Bommer said those deals
would benefit from "almost a double layer of vetting" from managers
and Blackstone.
He also expressed interest in PIPE deals -- private investments
in public equity -- in companies going public through blank-check
companies. Horizon also could scoop up shares of companies that
have recently gone public when lockups on early investors expire,
or be a cornerstone investor in companies that do a direct listing.
Direct listings are an increasingly popular way for companies to go
public that sidesteps the traditional process of initial public
offerings.
"I can't think of someone who's better at evaluating,
underwriting and then assessing both risk and reward," Mr. Dowling
said of Mr. Bommer, a friend since their days at business school
together in the 1990s.
"He's had thousands and thousands of reps [repetitions] across
industries and asset classes and that's what you need to be really
good, " Mr. Dowling said.
During his time at SAB, Mr. Bommer largely invested in
comparatively cheap public companies as a value investor and also
invested in special situations. He saw SAB grow to a height of $2
billion.
While it underperformed rivals toward its end, SAB bested the
total-return of the S&P 500 by more than 7% on an annualized
basis over its lifetime, with less risk, according to an investor
document viewed by The Wall Street Journal.
Mr. Bommer has been focused on late-stage growth investing with
his personal wealth since he closed SAB while also continuing to
invest in public markets. He was a seed investor in Latin American
delivery startup Rappi Inc. when it was valued around $20 million.
Its most recent round in September valued the company at $4.3
billion post-money.
Keeping a low profile as a hedge-fund manager, Mr. Bommer has
attracted attention for his real-estate transactions. He and his
wife, Donya, spent $93.9 million on three adjoining East Hampton
parcels that they sold in 2016 for $110 million. The Bommers in
2008 set what were records at the time for New York City co-op
apartment purchase and sales figures.
Write to Juliet Chung at juliet.chung@wsj.com
(END) Dow Jones Newswires
March 15, 2021 08:15 ET (12:15 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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