Due to market volatility, Blackstone's profits have declined and investment exits have been hindered.
Reuters October 22 - The world's largest alternative asset management company Blackstone Group (BX.N) announced on Thursday that its ability to realize investment gains was constrained by the turbulent market environment, leading to a decline in third-quarter profits.
Global markets are being hit by surging bond yields, expectations of “higher for longer” interest rates, and increased market volatility triggered by the war in Iran.
As a result, many potential deals have been put on hold, slowing trading and initial public offering (IPO) activity in the first half of the year. According to London Stock Exchange Group (LSEG) data, global mergers and acquisitions (link) in the third quarter fell 41% compared to the previous quarter.
Blackstone Group's net realizations (reflecting proceeds from investment exits) decreased by 34% to about $332 million, mainly due to its private equity business dropping by nearly 50%.
However, over $63 billion in net fund inflows eased performance pressures, pushing assets under management up to $1.37 trillion and driving a 6% increase in fee-related earnings.
Blackstone’s credit and insurance businesses contributed the largest share of new funds, attracting nearly $36 billion, followed by its private equity business with $12.6 billion.
Fee-related earnings from private equity fund investment management jumped 26% to $619 million.
Distributable earnings (profits available for distribution to shareholders) declined by 13% to $1.32 per share.
This year, alternative asset management companies are facing falling stock prices as investors remain cautious about prospects of slowing growth and the potential impact of advances in artificial intelligence on companies in their investment portfolios.
In particular, investor sentiment in private credit is especially tense, with large management institutions reporting a surge in redemption requests compared to previous quarters.
Blackstone Group last month said redemption requests for its BCRED fund remained elevated in the third quarter, but insisted that the portfolio’s fundamentals were still sound.
Blackstone Group’s stock price has plunged nearly 30% this year, in line with other asset management firms, while the broader market has risen by 13% and the S&P 500 financials index is up about 2%.
(To facilitate non-English speakers, Reuters has automated translation of its reports into several other languages. Because automated translation may contain errors or fail to capture required context, Reuters does not guarantee the accuracy of automated translations and provides them solely for reader convenience. Reuters accepts no liability for any damages or losses arising from the use of automated translation services.)
