(Bloomberg) — Blackstone’s third-quarter profit rose as its credit division grew thanks to an influx of investor capital, making it the company’s largest business in terms of assets.
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Distributable earnings rose 5.5% year over year to $1.28 billion, supported by the lending division, Thursday’s announcement said. The earnings measure came to $1.01 per share, beating the average estimate of 91 cents per share among analysts surveyed by Bloomberg.
The credit and insurance division raised $21.4 billion in the three months ended Sept. 30, more than half of Blackstone’s total capital raised from all businesses during the same period.
Blackstone stock rose 6.4% to $170.16 at 9:36 a.m. in New York.
At the end of the quarter, credit accounted for $354.7 billion of Blackstone’s $1.1 trillion in assets, making it the largest unit behind real estate. The company also decided to classify a portion of its real estate financing business as credit transactions.
Strong performance in the credit division helped the company overcome weak performance in private equity and real estate.
“We want to diversify our business,” President John Gray said in an interview.
The rise in confidence highlights the shift by the largest alternative asset managers to become financial superstores. This transformation has made the bank more like a bank and provided some relief during a difficult period for the private equity business.
The company’s stock has risen 22% this year through Wednesday, trailing competitors Apollo Global Management, KKR & Co. and Ares Management Corp.
high price
Acquisition heavyweights have tiptoed back to the deal table, but many are struggling to sell at the high prices they expected.
At Blackstone, delivery in key business areas remained slow in the third quarter, as the company indicated last month. Distributable profits fell 11% in private equity and 3% in real estate.
The real estate recession and high debt costs continued to weigh on the real estate sector. But redemptions in the firm’s flagship Blackstone Real Estate Income Trust slowed in the third quarter, falling sharply from its peak, while investments in the fund have increased since Oct. 1. are.
“If current trends hold, BREIT net flows will turn positive,” Gray said.
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The investment powerhouse has reached a milestone of $250 billion in assets under management for personal and banking channels. The company recorded its highest capital increase in three years, with private equity and infrastructure posting the highest growth in the period.
Blackstone, the world’s largest alternative asset manager, is the first such major company to announce financial results. Uncertainty surrounding the recovery of preliminary contracts and the close presidential election looms large over the industry this earnings season.
In a separate interview with Bloomberg TV, he added that the next election is likely to be “pretty close” due to the divided American public. Investors need to be aware that a candidate’s election rhetoric can diverge from subsequent policy actions and political compromises, Gray said.
“Investors need to make some adjustments to what’s going on right now in the midst of an election to see what happens in the end,” he said.
(Updated sharing in 4th paragraph and added quote from Jon Gray in last two paragraphs)
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