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What’s in Store for Blackstone’s Core Business in Q2?

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Jul. 12 2016, Published 12:37 p.m. ET

Blackstone’s core business

The Blackstone Group (BX) reported economic income of $92 million in its private equity or PE division for the March-ending quarter. Its total revenue was $245 million, versus $1.2 billion in the same quarter last year. Blackstone’s private equity portfolio value rose 1.7% over the previous quarter, which was mainly due to public portfolio appreciation.

Domestic equity (SPY) rose 2.7% in the June-ending quarter, reflecting improved performance compared to the March-ending quarter. The company’s holding in Hilton Worldwide (HLT) remained flat in the second quarter of 2016. The division’s assets under management expanded 25% over the same quarter last year to $95 billion as of March 31, 2016. Its fee earnings from assets under management expanded 2% to $50 billion during the same period. Blackstone continues to attract capital for its existing and new offerings, considering its strong track record.

In the June-ending quarter, Blackstone’s major holding Zimmer Biomet (ZBH) rose 13%. NXP Semiconductors (NXPI) fell 3.4%, Brixmor Property Group (BRX) rose 3.3%, and The Michaels Companies (MIK) rose 1.7%.

The company’s private equity portfolio rose 9.5% in 2015 while the S&P 500 fell 0.7% during the same period. The division’s performance income stood at $104 million in the March-ending quarter.

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Investing for the future

Blackstone deployed new capital of $2.0 billion during the quarter. This deployment included the closing of several new investments and synergistic add-on investments to existing platform deals. Blackstone has been aggressive in terms of fund deployment when the market offers attractive valuations. The company has stronger dry powder (undrawn capital) than alternatives such as The Carlyle Group (CG) and KKR (KKR).

The company achieved total realizations of $2.1 billion on public and strategic exits in corporate private equity funds. Blackstone raised commitments of $3.5 billion for the private equity segment in the first quarter. The amount included the initial close for the seventh secondary fund and the core private equity fund, with total third-party commitments reaching $30.3 billion over the past 12 months.

Next, let’s see how Blackstone is attracting record capital in the real estate space.

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