Blackstone markets $2B bond deal to sell private fund stakes

Blackstone Seeks to Sell $2 Billion in Private Fund Stakes Through Bond Deal

Blackstone is marketing a deal to sell more than $2 billion of its stakes in private investment funds by packaging the exposure into bonds, in what would be one of the largest transactions of its kind, the Financial Times reported on Sunday.ft

The New York-based firm is structuring the sale as a collateralized fund obligation, or CFO, that would bundle stakes in leveraged buyout funds and sell tranched debt and equity to investors. The deal would dwarf previous CFO transactions, including a $1.25 billion offering completed by Carlyle Group’s AlpInvest unit in August 2025, which held the record as the largest publicly rated GP-led CFO at that time.connectmoney

A Growing Market for Structured Private Equity

CFOs have gained traction in recent years as a tool for private equity firms to unlock liquidity from their fund portfolios without selling the underlying assets directly. The structures work by transferring limited partnership interests into a special purpose vehicle, which then issues rated debt tranches and unrated equity backed by cash flows from the fund investments.clockwork

The instruments function as a private equity analog to collateralized loan obligations, which bundle corporate loans into tranched securities. CFOs typically issue bonds valued at roughly 50 to 75 percent of the underlying funds’ worth, according to the Financial Times.ft

AlpInvest’s $1.25 billion deal last August came just 10 months after the unit closed its first $1 billion CFO in October 2024, underscoring the rapid growth of the market. Legal and advisory firms have been building out dedicated CFO practices in anticipation of further issuance.dechert

Timing and Context

The planned offering comes as Blackstone navigates broader pressures across its private markets empire. The firm recently restricted withdrawals from its $45 billion Blackstone Private Credit Fund after investors sought to redeem roughly 10 percent of shares during the second quarter, prompting the company to cap payouts at 5 percent.cnbc

Despite those headwinds, Blackstone projected strong inflows for 2026 during its January earnings call, with the firm forecasting $200 billion in deployable capital. The CFO transaction represents a different avenue for the firm to generate liquidity and recycle capital from mature fund investments back to investors, rather than waiting for traditional exit timelines to play out.seekingalpha