Updated version 2 - Due to market fluctuations, Blackstone Group's profits have declined, and investment exits have been hindered.
Added the market consensus expectation in paragraph 5 and updated the stock price information in paragraph 6.
Reuters, October 22 - Blackstone Group (BX.N), the world's largest alternative asset manager, announced on Thursday that its ability to realize investments was constrained by turbulent market conditions, leading to lower earnings in the third quarter.
Global markets are being hit by surging bond yields, expectations of “higher for longer” interest rates, and heightened volatility due to the war involving Iran.
As a result, many potential deals have been put on hold, slowing dealmaking and initial public offerings (IPOs) in the first half of this year. According to London Stock Exchange Group (LSEG) data, global M&A activity (link) fell 41% in the third quarter from the previous quarter.
Blackstone’s net realized gains (reflecting proceeds from investment exits) fell by 34% to approximately $332 million, mainly due to a nearly 50% plunge in its private equity business revenue.
Distributable earnings (i.e. profits available for distribution to shareholders) fell 13% to $1.32 per share. According to data compiled by London Stock Exchange Group (LSEG), analysts had previously expected $1.26 per share on average.
The company’s shares fell 2.2% in pre-market trading.
However, Blackstone’s performance was cushioned by over $63 billion in net fund inflows, bringing its assets under management to $1.37 trillion and boosting fee-related earnings by 6%.
Among these, credit and insurance businesses contributed the largest share of new funds, bringing in nearly $36 billion, followed by private equity, which attracted $12.6 billion.
Fee-related earnings from its private equity fund management rose 26% to $619 million.
This year, alternative asset managers are facing falling stock prices as investors remain cautious about future growth prospects and the potential impact of advances in artificial intelligence on companies in their portfolios.
Investor sentiment has been particularly tense in private credit, with several major managers reporting a surge in redemption requests compared to previous quarters.
Last month, Blackstone said its BCRED fund continued to see high redemption requests in the third quarter but maintained that the fundamentals of the portfolio remained solid.
The company's shares have plunged nearly 30% this year, in line with the performance of other asset managers; meanwhile, the broader market has gained 13% and the S&P 500 Financials Index is up about 2%.
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