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Rebounding Energy Prices Could Boost Alternative Managers’ Credit Divisions

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2Q17 performance

In 2Q17, Blackstone’s (BX) Credit division reported a decline in its performance fees compared to 2Q16, which is mainly due to volatility in energy prices. In 2Q17, BX’s Credit division reported performance fees of $35.4 million, reflecting a substantial decline of 68% on a year-over-year (or YoY) basis.

The division also witnessed a decline in its investment income in 2Q17 compared to 2Q16. In 2Q17, the division’s investment income stood at $2.6 million. In 2Q16, it stood at $19.7 million, reflecting a substantial decline of 86% on a YoY basis. Blackstone’s Credit division had deployments totaling $6 billion on an LTM (last-12-months) basis.

Carlyle Group’s (CG) management has a positive outlook on its structured credit business. Fundraising for credit vehicles and new business development companies (or BDCs) also occurred in its Credit division.

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Outlook

In 2H17, rebounding energy prices could benefit the credit divisions of alternative asset managers (XLF). However, Apollo Global Management’s (APO) Credit division experienced a sequential increase in management fees in 2Q17.

APO’s Credit division reported management fees of $169.8 million in 2Q17 compared to $158.3 million in 1Q17. KKR & Co.’s (KKR) Public Market division’s fee-generating assets under management on June 30, 2017, stood at $50.6 billion.

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