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Blackstone’s Private Equity Division Saw a Strong Performance

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Dec. 26 2017, Updated 3:25 p.m. ET

Total revenue

The Blackstone Group’s (BX) private equity division posted total revenue of $1.4 billion in the first nine months of 2017, compared to $895.3 million in the first nine months of 2016, implying a rise in the realized carried interest that forms part of its performance fees.

The private equity division generated total performance fees of $777.6 million in the first nine months of 2017, compared to $417.2 million in the first nine months of 2016, thanks to the favorable momentum it saw in its tactical opportunities and corporate private equity.

The private equity division garnered total net management and advisory fees of $565.5 million in the first nine months of 2017, compared to $402.7 million in the first nine months of 2016, mainly due to a rise in its base management fees.

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Division’s expenses

Blackstone’s private equity division saw a rise of 36% in its total expenses YoY (year-over-year) in the first three quarters of 2017, mainly due to a rise in its total compensation and benefits expenses. The division incurred expenses of $592 million in the first nine months of 2017, compared to $395.4 million in the first nine months of 2016, implying a rise in realized carried interest.

The private equity division saw a rise of 14% in compensation expenses YoY in the first three quarters of 2017. The division generated economic income of $703.7 million in the first nine months of 2017, compared to $355.9 million in the first nine months of 2016.

On a trailing-12-month basis, while Blackstone has posted a return on equity (or ROE) of 24.2%, its peers (XLF) CBRE Group (CBG), Brookfield Asset Management (BAM), and Greenhill & Co. (GHL) posted ROEs of 23.4%, 2.2%, and 8.1%, respectively.

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