Stephen Schwarzman, chairman, chief executive and co-founder of Blackstone Group, said the firm is in a “mega cycle” as underfunded public pension plans are forced to increase allocations to alternative assets.

Schwarzman said on his firm's third-quarter results call yesterday: "Pension funds face a funding shortfall which puts us in a mega cycle as Blackstone stands out with significant experience in managing illiquid asset classes. The reason we have been able to raise more money than our peers is because of our record of good returns."