Blackstone Group LP, the world’s biggest manager of alternative assets such as real estate and private-equity funds, raised an initial $1.4 billion to buy stakes in hedge-fund firms, Vice Chairman Tom Hill said.

Blackstone is seeking $3 billion for the strategy, which will target firms with $3 billion to $4 billion in assets, Hill said today at Credit Suisse Group AG’s financial-services forum in Boca Raton, Florida. New York-based Blackstone is seeing opportunities to buy stakes at valuations of 4.5 to 5 times cash flow, he said.

“You have an opportunity not only to benefit from their growth but also to look down the road at creating a public vehicle for that,” Hill said. “We will, in our mind, dominate that space the way we have dominated the seeding space.”

Blackstone’s hedge funds-of-funds group, which has grown to $56 billion in assets since Hill took over in 2000, already has funds that seed new managers by providing them with $100 million to $200 million in initial capital. The new strategy will identify existing hedge-fund managers that Blackstone is convinced will “continue to grow and do well,” Hill said.