(Bloomberg) — Blackstone Inc.’s growth investing team committed more than $1 billion of financing to Europe tech companies over the last year, and it has plans to increase that further.
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New York-based Blackstone is the world’s largest alternative asset manager, best known for its portfolio of real estate and infrastructure holdings. Like other private-equity firms, it is increasingly looking to invest in technology deals including providing financing to startups and it’s picking up that activity in Europe where it sees a gap.
“If we look at the late stage specifically where we play, I think there’s less capital in Europe than there is in the U.S.,” Blackstone growth’s regional head Paul Morrissey said in an interview at the firm’s London offices last week. “We want to become the go-to investor for growth stage investments across Europe.”
Blackstone’s growth unit raised an initial $4.5 billion fund in March 2021 and Bloomberg News has reported the firm may aim to raise as much as $10 billion for a second fund. The company has hired executives globally to lead efforts, bringing Morrissey last year from Battery Ventures to run the team’s activity in Europe.
The growth fund has begun to make investments locally, backing payment service startup Mollie in a round that valued it at $6.5 billion. It also has invested in retail planning solutions provider Relex Solutions at a 5 billion euro ($5.4 billion) valuation, and the Blackstone growth team also worked on an investment in the $11 billion software startup Celonis.
Europe’s venture sector has boomed in recent years, deploying more than $100 billion across 2021 in a record year, according to a report compiled by investment firm Atomico. However, their remains a gap when it comes to growth financing that is holding European growth back, according to a separate report from venture capital firm Lakestar.
That apparent discount and opportunity has attracted other American tech investors to open Europe offices and explore local hires including Sequoia Capital, General Catalyst, Coatue Management and New Enterprise Associates. EQT is also expanding its growth-advisory team in the region.
Morrissey said Blackstone’s growth fund invests in sectors such as software, fintech, consumer and health care. When it comes to crypto currency, the unit is most attracted to the “picks and shovels” that supports the broader ecosystem such as anti-money laundering and compliance technology.
While turbulent public markets and geopolitical instability stemming from Russia’s invasion of Ukraine have led to a slowdown in private tech markets, Morrissey said he expects that to only last a period of months. And he said he wants to see more European companies have their public listings locally, rather than in the U.S. — something that has proved a challenge for regional exchanges.
With the growing amount of traditional private equity firms investing in startups, Morrissey added that it raises the question of “why would a company necessarily need to go public, if we can provide that capital.”
“The itch to go public somewhat goes away and they also don’t have to deal with a lot of the struggles of being a public company, which we see day in and day out,” he added.
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