Blackstone buries growth equity

JAS KHAIRA, a veteran of Blackstone's Tactical Opportunities arm, has spent two decades at the firm building one business — the digital-infrastructure book, brick by brick. He helped finance fiber and tower companies in the late 2010s, the data-center push that followed, and, in May 2024, the $7.5 billion debt facility for CoreWeave that Blackstone has called the largest commitment to a new loan in its history. On April 29th, Khaira was named head of Blackstone Growth, the firm's growth-equity unit, and asked to relocate from New York to San Francisco. The unit will be renamed Blackstone N1 and folded into a new AI-focused division. The man who finances data centers now runs the firm's bet on the model layer.

The official framing is straightforward. Steve Schwarzman, Blackstone's boss, and Jon Gray, its president, want a dedicated team at the center of AI investing, on the West Coast, with authority over the OpenAI and Anthropic stakes that already sit across BXPE, Tac Opps, and the growth fund. Eight of the firm's ten best-performing investments last quarter fell within the AI ecosystem. The build-out is, in Gray's words, the single largest driver for the $1.3 trillion manager. A single division to coordinate the bet is the obvious move.

The unofficial story is in what is being absorbed. Blackstone Growth, known as BXG, was launched in 2020 as the largest first-time growth-equity vehicle ever — $4.5 billion at final close, a moment Jon Korngold, BXG's founding head, celebrated as the dawn of a new platform. Its inaugural bets — Bumble, Oatly, ISN, Epidemic Sound — were vintage 2021. Bumble's shares are down roughly 85% from BXG's entry; Oatly's, more than 95%. The fund is reported to be running a negative IRR. The second fund raised another $4.5 billion against an initial target of $9 billion, and in 2023 Schwarzman and Gray staged what Bloomberg described as an "intervention" with Korngold and redistributed parts of his book. Wednesday's internal memo praised 7 Brew, a coffee-shop chain BXG had backed, for performing well. The same memo announced that Korngold was leaving and the BXG name was being retired with him.