Blackstone’s BX-N first-quarter profit edged past market expectations on Thursday, as the world’s largest alternative asset manager raked in new assets and cashed in on its investments at a time when markets were buffeted by war and economic uncertainty.
The New York-based firm’s total assets under management leapt 12 per cent to about US$1.3-trillion. Its credit and insurance business contributed the largest chunk of new inflows, bringing in US$37-billion, followed by private equity with US$20.4-billion.
Managers of alternative assets – a wide range of securities that live outside traditional stock and bond markets – have seen their stock slide on fears of slower future growth, potential AI disruption to their portfolio companies and questions around lending standards.
Blackstone’s shares have rebounded this month but are still trading close to 16-per-cent lower on the year. The S&P 500 Financials Sector index is down more than 4 per cent in that time.
For the first quarter, distributable earnings, or cash that can be used to pay dividends to shareholders, rose 25 per cent to US$1.76 billion, or US$1.36 per share. Analysts on average had expected US$1.35 per share, according to data compiled by LSEG.
Chairman and CEO Stephen Schwarzman said Blackstone totted up nearly US$70-billion in total inflows and achieved positive appreciation across nearly all its flagship investment strategies “despite the turbulent environment.”
“Our all-weather model protects us in these times of disruption while also allowing us to invest where we see the greatest opportunity,” he said.
Net realizations rose 26 per cent to US$448.4 million. This was bolstered by the private equity business, where Blackstone sold stock in Medline, the medical devices maker it took public last year which soared from its offer price of US$29 and is now trading around US$47. It also sold space technology provider ARKA to U.S. defence contractor CACI International.
Institutional investors, which typically include pension funds, insurers and other holders of large capital pools who can lock up their funds for long stretches of time, contributed one of their biggest quarterly funding hauls to Blackstone’s credit business in its history, the company said.
Elsewhere in Blackstone’s investor base, wealthy individuals turned nervous, resulting in net outflows at its flagship private credit fund in the first quarter.
But BREIT, a large real estate fund aimed at similar investors which blocked redemptions in 2022, has been gradually clearing the backlog and has now moved back into net inflows, the company said.