Key Takeaways
- • Blackstone (BX.N), the world's largest alternative asset manager, reported a drop in third-quarter earnings on October 22, as a turbulent market weighed on its ability to realize investment exits.
- • Net realizations fell 34% to about $332 million, with a nearly 50% drop in the private equity business driving the decline, according to Reuters.
- • Net inflows exceeded $63 billion, lifting assets under management to $1.37 trillion and fee-related earnings up 6%, with credit and insurance contributing nearly $36 billion.
- • Distributable earnings fell 13% to $1.32 per share, while shares have dropped nearly 30% year to date versus a 13% gain in the broader market.
- • Global M&A activity fell 41% sequentially in the third quarter per LSEG data, as surging bond yields, higher-for-longer rate expectations and Iran war-related volatility put deals on hold.
Summary
Blackstone posted a drop in third-quarter earnings on Thursday, October 22, as a turbulent market environment limited its ability to cash in on investments, according to Reuters. Global markets have been roiled by surging bond yields, expectations of higher-for-longer interest rates and elevated volatility tied to the Iran war. Many prospective deals have been put on hold, contributing to a slowdown in deals and IPOs in the first half of the year. Global M&A activity fell 41% sequentially in the third quarter, according to LSEG data.
Blackstone's net realizations, which track proceeds from investment exits, fell 34% to about $332 million, weighed down by a nearly 50% drop in its private equity business. Distributable earnings, or profit available to shareholders, fell 13% to $1.32 per share. Shares fell 1.2% in premarket trading.
The results were cushioned by net inflows of more than $63 billion, which pushed assets under management to $1.37 trillion and lifted fee-related earnings by 6%. Blackstone's credit and insurance business accounted for the largest share of new inflows at nearly $36 billion, followed by private equity at $12.6 billion. Fee-related earnings from managing investments in its private equity funds rose 26% to $619 million.
Alternative asset managers have seen their stock prices slide this year as investors grew cautious about slower future growth and potential AI-driven disruption to portfolio companies. Private credit has drawn particular investor concern, with large managers reporting surging redemption requests over recent quarters. Blackstone said last month that requests in its BCRED fund remained elevated in the third quarter, but maintained that the portfolio's fundamentals remain healthy. Blackstone's shares have plummeted nearly 30% this year, broadly in line with other asset managers, compared with a 13% gain in the broader market and about 2% in the S&P 500 Financials index.
Blackstone's net realizations, which track proceeds from investment exits, fell 34% to about $332 million, weighed down by a nearly 50% drop in its private equity business. Distributable earnings, or profit available to shareholders, fell 13% to $1.32 per share. Shares fell 1.2% in premarket trading.
The results were cushioned by net inflows of more than $63 billion, which pushed assets under management to $1.37 trillion and lifted fee-related earnings by 6%. Blackstone's credit and insurance business accounted for the largest share of new inflows at nearly $36 billion, followed by private equity at $12.6 billion. Fee-related earnings from managing investments in its private equity funds rose 26% to $619 million.
Alternative asset managers have seen their stock prices slide this year as investors grew cautious about slower future growth and potential AI-driven disruption to portfolio companies. Private credit has drawn particular investor concern, with large managers reporting surging redemption requests over recent quarters. Blackstone said last month that requests in its BCRED fund remained elevated in the third quarter, but maintained that the portfolio's fundamentals remain healthy. Blackstone's shares have plummeted nearly 30% this year, broadly in line with other asset managers, compared with a 13% gain in the broader market and about 2% in the S&P 500 Financials index.
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