Blackstone folds hedge fund seeding into US$60 billion business

Published Thu, Feb 12, 2026 · 01:33 PM

[LONDON] Blackstone is moving its unit that backs startup hedge funds into the US$60 billion Absolute Return business, giving itself scale to compete with the multistrategy industry giants writing ever-bigger checks to attract trading talent.

The restructuring will see Blackstone’s Strategic Alliance Fund (SAF) run within Absolute Return, with seeding deals sourced and executed by the team that allocates capital across hedge funds and other strategies, according to the US investment firm.

SAF typically gives emerging managers locked-up startup capital in the region of US$150 million, in exchange for a cut of their revenue. Now, Blackstone can combine SAF money with cash from Absolute Return and the firm’s family office channels to offer new investment firms sums of between roughly US$250 million and US$450 million.

That greater scale comes with potential savings on fees, as well as heftier support for traders who are in high demand across the hedge fund industry.

“Operating as one platform is more efficient for managers and for our clients,” David Ben-Ur, chief investment officer of Blackstone’s Absolute Return platform, said. “It allows us to bring a broader set of solutions, capital, long-term partnership and distribution, through a single, coordinated relationship.”

The change means Brian Snider, who helps oversee the seeding business, is leaving the firm, according to sources with knowledge of the matter who declined to be identified discussing personnel. The two remaining members of his team are staying. Snider declined to comment.

Under the new model, the Absolute Return teams focused on equities, credit, quant and macro will identify and invest across asset classes and strategy types. The Absolute Return platform is part of the US$96 billion Blackstone Multi-Asset Investing business headed by Joe Dowling.

Blackstone’s move is a response to the growing use of separately managed accounts, where large hedge funds give billions of US dollars of their capital to outside traders, broadening their investment approach while muscling out smaller potential backers.

“The market has shifted towards large platforms that can move quickly and write sizeable checks. Our integrated model helps us compete effectively while staying aligned with our clients’ objectives,” Ben-Ur added.

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SAF’s longer-term future will be determined after the current fund is fully invested, according to a spokesperson. About US$500 million remains to be allocated and Blackstone is in talks with multiple players to deploy the capital.

Blackstone is already embarking on these mixed funding deals. One recent example was with Jonathan Xiong’s Arrowpoint Investment Partners, which won a SAF-style seed investment alongside roughly US$300 million of Absolute Return capital. The additional capital carried no revenue share but included fee discounts, bringing the total allocation to about US$450 million. Covara Capital also got similar hybrid capital from Blackstone.

Representatives for Arrowpoint and Covara declined to comment. The US$5 trillion hedge fund industry had a banner year in 2025, with the buzz around artificial intelligence, geopolitical shocks and interest rate uncertainty adding to market volatility and creating rich trading opportunities. BLOOMBERG