BLACKSTONE CEO: There is a big shake out underway

There's a growing trend for public pensions and sovereign wealth funds to reduce the number of private equity firms they park their cash with.

Steve Schwarzman, the CEO of private equity giant Blackstone Group, isn't fazed.

"They're getting rid of their underperformers," Schwarzman told Business Insider.

It's going to cause a lot of pain over the next decade in the industry, as there are widespread expectations that a number of firms will have to shut down if they are unable to raise new funds.

"This trend in no way surprises me," Schwarzman said.

"As private equity started to become an asset class, individual institutions appeared from the GP side to be more in the sampling mode.

"They gave money to a lot of different managers without necessarily understanding what the performance was, or was likely to be."

Sampling mode

This shouldn't be conflated with how much private equity firm investors are spending: that figure has steadily risen. That has helped Blackstone, which has boosted its assets under management nearly four-fold in the last eight years.

NOW WATCH: This is what will happen when the Fed raises rates

Please enable Javascript to watch this video