Blackstone‘s 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% to about $1.3 trillion. Its credit and insurance business contributed the largest chunk of new inflows, bringing in $37 billion, followed by private equity with $20.4 billion.
Managers of alternative assets—a wide range of securities that live outside traditional stock and bond markets—have seen their shares 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 nearly 16% lower for the year as of Wednesday’s close. They were down about 1.5% in choppy premarket trading after the results. The S&P 500 Financials Sector index is down more than 4% this year.
Among its private credit strategies, a part of the market that is under intense scrutiny, net returns were flat for the first quarter and 5.7% for over the last twelve months.
This is slightly above the performance of leveraged loans trading on the public market, which fell 0.6% in the first quarter and posted gains of around 4.5% over the past year, according to the Morningstar LSTA index.
For the first quarter, distributable earnings, or cash that can be used to pay dividends to shareholders, rose 25% to $1.76 billion, or $1.36 per share. Analysts on average had expected $1.35 per share, according to data compiled by LSEG.
Chairman and CEO Stephen Schwarzman said Blackstone totted up nearly $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 realisations rose 26% to $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 $29 and is now trading around $47. It also sold space technology provider ARKA to US 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 about private credit, resulting in net outflows at its flagship BCRED fund in the first quarter, but they added $2.5 billion to the private equity fund.
But BREIT, a large real estate fund aimed at similar investors that blocked redemptions in 2022, has been gradually clearing the backlog and has now moved back into net inflows, the company said.
Reuters
