Key Takeaways
- • Blackstone expects widening credit spreads on AI infrastructure debt to create opportunities for higher-yielding new investments, according to Reuters, as CoreWeave-linked selloff reprices sector debt.
- • Blackstone's third-quarter net realisations fell 34% to approximately $332m, with its private equity realisations down nearly 50%, amid weaker dealmaking.
- • Blackstone assets under management reached $1.37tn, with credit and insurance attracting nearly $36bn and private equity inflows of $12.6bn.
- • Private equity fee-related earnings rose 26% to $619m, while total fee-related earnings grew 6%.
- • Global M&A activity fell 41% quarter-on-quarter in Q3 per LSEG, and Blackstone expects a significant increase in fourth-quarter net realisations.
Summary
Blackstone expects widening credit spreads on artificial intelligence infrastructure debt to create opportunities for higher investment returns, according to a report by Reuters. President and chief operating officer Jon Gray reportedly said rising borrowing costs could allow investors to secure more attractive yields on new AI infrastructure projects, particularly assets that have yet to secure tenants. The comments follow a selloff in AI-related debt triggered by concerns over CoreWeave, one of the sector's largest borrowers and a significant recipient of Blackstone financing. Investors have become increasingly cautious about the sustainability of AI infrastructure spending and the leverage supporting its expansion.
The firm's third-quarter exits weakened considerably. Net realisations fell 34% to approximately $332m, including a nearly 50% decline in its private equity business, as higher interest rates and market volatility constrained investment exits. Global M&A activity declined 41% quarter-on-quarter in the third quarter, according to LSEG, as higher borrowing costs and geopolitical volatility weighed on transactions. Blackstone executives reportedly said they expected a significant increase in net realisations during the fourth quarter, despite continued market uncertainty.
Despite the slowdown in exits, the alternative asset manager exceeded Wall Street earnings expectations. Assets under management reached $1.37tn following strong investor inflows. Fee-related earnings increased 6%, while fee-related earnings from private equity rose 26% to $619m. The credit and insurance division attracted nearly $36bn in new capital, followed by $12.6bn in private equity inflows.
Blackstone has also faced elevated redemption requests at its flagship private credit vehicle, BCRED, although the firm maintains that the portfolio's underlying fundamentals remain healthy. Its shares had fallen nearly 30% year-to-date through Wednesday, compared with a 13% gain in the broader US equity market.
The firm's third-quarter exits weakened considerably. Net realisations fell 34% to approximately $332m, including a nearly 50% decline in its private equity business, as higher interest rates and market volatility constrained investment exits. Global M&A activity declined 41% quarter-on-quarter in the third quarter, according to LSEG, as higher borrowing costs and geopolitical volatility weighed on transactions. Blackstone executives reportedly said they expected a significant increase in net realisations during the fourth quarter, despite continued market uncertainty.
Despite the slowdown in exits, the alternative asset manager exceeded Wall Street earnings expectations. Assets under management reached $1.37tn following strong investor inflows. Fee-related earnings increased 6%, while fee-related earnings from private equity rose 26% to $619m. The credit and insurance division attracted nearly $36bn in new capital, followed by $12.6bn in private equity inflows.
Blackstone has also faced elevated redemption requests at its flagship private credit vehicle, BCRED, although the firm maintains that the portfolio's underlying fundamentals remain healthy. Its shares had fallen nearly 30% year-to-date through Wednesday, compared with a 13% gain in the broader US equity market.
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