Blackstone Inc. has become the first private equity company to reach the historic milestone of managing $1 trillion in assets. However, a downturn in global deal making that impacted second-quarter profits has tempered this achievement.
Blackstone bragged in its latest quarterly earnings report that it controlled just over $1 trillion in assets as of the end of June. It is a big accomplishment for the equity firm amid a slump in global deal-making, which has also affected the firm’s profit in the second quarter.
The amount of profit available to shareholders, measured by distributable earnings, fell 39 percent to $1.2 billion, the lowest level in two years. Blackstone currently manages $1.001 trillion in assets, up from $940.8 billion the previous year.
During morning trading in New York, the company’s stock declined two percent. However, it is important to note that despite this setback, Blackstone’s stock has gained 46 percent this year. In the same period, the S&P 500’s gained 19 percent.
In the second quarter, despite a decline in distributable earnings, the New York-based company reported an increase in another crucial measure of profitability.
Fee-related earnings and recurring revenues from asset management surged by 12 percent year over year, as stated in an official announcement released on Thursday. This growth was primarily driven by fees generated from new funds and a rebound in equity markets that bolstered asset prices.
However, even as the world’s largest alternative asset manager demonstrated its strength, it was not immune to the broader industry trend of reduced deals.
In the face of lack of consensus on private asset valuations between buyers and sellers, Blackstone had decided to adopt a cautious approach by slowing down the pace of new agreements and prioritizing payouts for existing stakes.
Blackstone had previously outlined its ambitious plan to raise approximately $25 billion for its highly regarded flagship fund. So far, the firm has successfully accumulated $17 billion in funds toward this target.
Notably, credit played a pivotal role in driving inflows for the company. This emphasis on credit underscored Blackstone’s evolution into a prominent non bank lender, signaling a strategic shift away from its acquisition-focused origins. Credit products constituted nearly half of all inflows, highlighting the growing significance of this sector within Blackstone’s diverse portfolio.
(With inputs from Bloomberg)
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