uploads///ROIC

Behind Blackstone’s Hedge Fund Solutions Division

By

Dec. 27 2017, Updated 10:31 a.m. ET

Why total revenues rose

The Blackstone Group’s (BX) hedge fund solutions division generated total revenue of $573.3 million in the first nine months of 2017, compared to $426.6 million in the first nine months of 2016. This rise reflected favorable momentum in the division’s investment income and performance fees.

The hedge fund solutions division’s performance fees rose $114.7 million YoY (year-over-year) in the first three quarters of 2017, implying a rise in the returns of BPS Composite. The division’s investment income rose $40.7 million YoY in the first three quarters of 2017, mainly aided by investment appreciation.

On a trailing-12-month basis, while Blackstone reported a return on invested capital of 13.8%, its peers (XLF) Brookfield Asset Management (BAM), CBRE Group (CBG), and Greenhill & Co. (GHL) reported returns on invested capital of 3.8%, 11.9%, and 6.8%, respectively.

Article continues below advertisement

Total expenses

BX’s hedge fund solutions division incurred total expenses of $274.2 million in the first three quarters of 2017, compared to $236.8 million in the first three quarters of 2016, reflecting a rise in its performance fee compensation due to favorable momentum in its performance fee revenue. However, the division saw a fall in compensation expenses to $139.3 million in the first nine months of 2017 from $145.8 million in the first nine months of 2016, marking a 4% decline.

The hedge fund solutions division generated economic income of $299.1 million in the first three quarters of 2017, compared to the $189.8 million it generated in the same period of 2016, reflecting a 58% rise.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.