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The Truth behind Blackstone's Record 1Q17 Numbers

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The Truth behind Blackstone's Record 1Q17 Numbers PART 1 OF 8

Behind Blackstone’s Strong Growth in 1Q17

Doubled profits

Blackstone Group (BX), the world’s largest alternative asset manager, reported an ENI (economic net income) of $0.82 for 1Q17, which was higher than the analysts’ estimate of $0.68. Blackstone saw 166% growth in its ENI, reaching $986 million in 1Q17 on the back of $1.9 billion in revenue. The company has seen strong growth across all major divisions, including its private equity, real estate, credit, and hedge funds businesses.

Behind Blackstone&#8217;s Strong Growth in 1Q17

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Blackstone reported AUM (assets under management) of $368.2 billion in 1Q17, as compared to $366 billion in the previous quarter, backed by new funds raised worth $14 billion, its organic platform expansion, and its rise in valuations. This rise was partially offset by higher realizations.

On a YoY (year-over-year) basis, the company saw a rise of 7% in its AUM and 15% in its fee-earning AUM, totaling $280 billion. Blackstone saw strong deployments of $11.7 billion across its sectors and regions in 4Q16.

In a recent press release, Blackstone Chairman and CEO (chief executive officer) Stephen A. Schwarzman stated: “The result was a more than doubling of revenue and earnings versus the prior-year period, and our second-best quarterly distribution ever, at $0.87 per common unit. In total, we will have distributed nearly $14 per common unit of value since the IPO, including $2.50 per year on average over the past three years…making Blackstone consistently one of the highest yielding large-capitalization companies in the world.”

Alternative investments

Blackstone provides alternative asset management services and attracts competition from traditional and alternative asset managers that form part of the SPDR S&P 500 Index (SPX-INDEX) (SPY). Blackstone’s revenue rose 10% in 2016 to $5.1 billion.

By comparison, the revenue growth for competitors Apollo Global Management (APO), Carlyle Group (CG), and KKR & Company (KKR) rose 89%, 36%, and 83%, respectively, in 2016 due to performance rebounds.

In this series, we’ll examine Blackstone’s performance by division, its realizations, deployments, initiatives, dividends, and valuations in 1Q17. We’ll begin with the Private Equity division’s performance in 1Q17.

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