Updated version 1 - Due to market fluctuations, Blackstone Group's profits have declined and investment exits are hindered.
Added stock price information in paragraph 5
Reuters, October 22 - The world’s largest alternative asset manager Blackstone Group (BX.N) announced on Thursday that volatile market conditions have restricted its ability to cash out investments, leading to a drop in third-quarter profits.
Global markets are being hit by soaring bond yields, expectations of higher-for-longer interest rates, and increased market volatility intensified by the war in Iran.
As a result, many potential deals have been put on hold, slowing trading and initial public offering (IPO) activities in the first half of the year. According to data from London Stock Exchange Group (LSEG), global mergers and acquisitions (link) fell 41% quarter-over-quarter in the third quarter.
Blackstone’s net realizations (reflecting proceeds from investment exits) fell 34% to about $332 million, largely dragged down by nearly a 50% decline in revenue from its private equity business.
The company’s share price fell 1.2% in pre-market trading.
However, over $63 billion in net inflows eased performance pressure, pushing assets under management up to $1.37 trillion and boosting fee-related earnings by 6%.
Blackstone’s credit and insurance businesses contributed the largest share of new capital, attracting nearly $36 billion, followed by the private equity business with $12.6 billion.
Fee-related earnings from its private equity fund management surged 26% to $619 million.
Distributable earnings (profits available for shareholders) fell 13% to $1.32 per share.
This year, alternative asset managers are struggling with falling share prices as investors remain cautious about the outlook for slower future growth and the potential impact of advances in artificial intelligence on companies in their investment portfolios.
In private credit in particular, investor sentiment is especially tense, with major managers reporting a surge in redemption requests compared to previous quarters.
Blackstone said last month that third-quarter redemption requests for its BCRED fund remained elevated, but insisted that the fundamentals of the portfolio were still sound.
The company’s share price has plummeted nearly 30% this year, roughly in line with other asset managers; meanwhile, the broader market is up 13% and the S&P 500 Financials Index has risen about 2%.
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