Blackstone Creates Corporate Credit, Asset-Based Finance, Insurance Group

Blackstone Inc. plans to form a new business unit out of its corporate credit, asset-based finance and insurance groups. The new group, named Blackstone Credit & Insurance, will seek to streamline the investment process for clients and will act as a one-stop place for alternatives such as private credit, the firm announced on Wednesday.

Blackstone CEO and Co-Founder Steve Schwarzman has big plans for the new group. “We see the opportunity for BXCI, along with Real Estate Credit, to reach $1 trillion in the next 10 years,” Schwarzman said in a statement from the company. Blackstone in July announced its assets under management topped $1 trillion.

“Exceptional demand from our clients has made Credit and Insurance the fastest-growing segment at Blackstone,” Jon Gray, Blackstone’s president and chief operating officer, said in the statement. “This integration allows us to be an even more effective lender and more comprehensively serve our insurance, pension fund and private wealth clients.”

The move by Blackstone, the largest private equity manager by assets, comes at a time when group and individual annuity sales are hitting record levels in the U.S., and growing numbers of corporate pension plan sponsors are engaging in or considering pension risk transfer transactions to offload some or all of their pension liabilities.

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In June, Fidelity formed Soteria Reinsurance Ltd., a Bermuda-based reinsurance firm focused on pension risk transfer. Earlier in September, Prudential Financial Inc. and Warburg Pincus LLC announced the creation of another Bermuda-based life and annuity reinsurance company, Prismic Life Reinsurance Ltd.

Prudential announced in August it completed a $1 billion pension risk transfer deal with utility company PSEG, and in May, AT&T Inc. disclosed it was transferring $8.05 billion in pension assets to insurer Athene Holding Ltd.

The predecessor units of Blackstone’s new group have been the company’s fastest growing. In the last three years, they have collectively doubled their AUM to $295 billion, the firm reported. Blackstone’s insurance assets alone have tripled since 2020.

The firm also announced several promotions related to the formation of ‘BXCI,’ its shorthand for the group. Gillas Dellaert, global head of insurance solutions, will be promoted to global head of BXCI. Dwight Scott, global head of credit, will be promoted to chairman of BXCI. Jonathan Pollack, global head of structured finance, will become global head of real estate credit.

“I am excited to take on this new role and believe that there is immense white space to continue expanding our leading credit and insurance platforms,” Dellaert said in the statement. “Bringing together nearly all of the firm’s credit activities further extends the competitive advantage of Blackstone’s scale, private origination capabilities, and intellectual capital—helping us better serve our clients.”

“The combined BXCI team will deliver the best of Blackstone to our investors and borrowers,” Scott said in the statement. “We believe we are still in the early innings of a megatrend in private credit. Particularly in today’s elevated base rate environment—and given the senior-secured structure of many of our products—we believe it is currently the best risk-adjusted environment for this asset class in decades.”

Tags: Blackstone, Blackstone Credit & Insurance, Dwight Scott, Gillas Dellaert, Jon Gray, Steve Schwarzman

Pensions funds from New York City and Oregon allege that Fox Corp. exposed itself to defamation lawsuits and breached its fiduciary duty following the network’s controversial coverage of the 2020 U.S. presidential election.

In April, Fox settled a $787 million defamation lawsuit brought by the voting machine company Dominion Voting Systems after Fox networks falsely alleged Dominion was a involved in modifying results during the 2020 presidential election. Fox also faces a $2.7 billion lawsuit from Smartmatic USA Corp., another voting machine company.

The Oregon Public Employee Retirement Fund and the New York City Public Pension Funds allege the Dominion lawsuit and settlement resulted in losses, as they owned shares in Fox.

The Oregon Public Employee Retirement Fund held more than 226,000 Class A and Class B shares of Fox, worth $5.2 million as of August 31. The Oregon Department of Justice filed a suit in the Delaware Court of Chancery on behalf of OPERF and the Oregon Investment Council.

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The five New York City pension funds own approximately 572,946 shares of Fox Class A stock and 285,338 shares of Fox Class B stock, valued at $27.7 million as of August 31, 2023, according to the New York City comptroller’s office.

“The board of Fox Corporation took a massive risk in pursuing profits by perpetuating and peddling known falsehoods,” said Ellen Rosenblum, Oregon’s attorney general, in a statement. “The directors’ choices exposed themselves and the company to liability and exposed their shareholders to significant risks. That is the crux of our lawsuit, and we look forward to making our case in court.”

New York’s five retirement funds, the New York City Employees’ Retirement System, Teachers’ Retirement System, Board of Education Retirement System, New York City Fire Pension Fund and New York City Police Pension Fund, joined Oregon’s lawsuit as co-plaintiffs.

“Fox’s board of directors has blatantly disregarded the need for journalistic standards and failed to put safeguards in place despite having a business model that invites defamation litigation,” New York City Comptroller Brad Lander said in a press release. “A lack of journalistic standards and a proper strategy to mitigate defamation has clearly harmed Fox’s reputation and threatens their bottom line and long-term profitability. Clear governance systems are absolutely necessary for the long-term health of a company. As Fox’s board continues to ignore these red flags, we are holding them accountable as long-term shareholders.”

The lawsuit, whose case number is 2023-0931, alleges that Fox board members, specifically chairman Rupert Murdoch and his son, were aware that promoting election conspiracy theories on its networks would open the company up to lawsuits and financial liability at the expense of its shareholders.

The Dominion lawsuit resulted in poor earnings for the third quarter of this year, with Fox losing $54 million, or 10 cents per share, compared to 3Q 2022, when the company generated $283 million in net income. According to the lawsuit, the value of the settlement for the Smartmatic case could exceed one billion dollars.

Tags: New York City Board of Education Retirement System, New York City Employees' Retirement System (NYCERS), New York City Fire Pension Fund, New York City Police Pension Fund, New York City Teachers’ Retirement System (TRS), OPERF, Oregon Public Employees Retirement Fund (PERF)