Core business delivers
Private equity has been Blackstone’s core business, and it contributes almost half of its total profitability. The division recorded 139% growth to $1.1 billion compared to the first quarter of the previous year. The performance of its portfolio companies contributed highest to its revenue and overall profitability. Blackstone raised $2.4 billion of new capital for the second Tactical Opportunities platform and deployed $2.5 billion of the new capital in the first quarter. Major realizations in the first quarter include Catalent, Pinnacle Foods, Michaels, and Merlin. Blackstone also completed the successful initial public offering of Summit Materials and announced the strategic sale of Freescale.
The Blackstone Group L.P. (BX) operates its funds under the partnership structure. The limited partners subscribe to funds by committing capital. Blackstone’s private equity segment includes corporate, private equity funds, tactical opportunities, business, and private funds of funds. The company has raised six general private equity funds and two specialized funds that focus on energy- and communications-related investments. Together, these businesses are called Blackstone Capital Partners (or BCP) funds.
Blackstone’s private equity segment has performed better than its peers in the alternative management space. Its peers include the Carlyle Group (CG), KKR & Co. L.P. (KKR), Apollo Global Management (APO), and T. Rowe Price (TROW). Its peers also include other major players that form part of the Financial Select Sector SPDR Fund (XLF) and the iShares U.S. Financials ETF (IYF).