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Analyzing BX’s Private Equity Segment’s Performance in 4Q17

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Year-over-year increase

The Blackstone Group’s (BX) Corporate Private Equity segment’s total revenue rose from $460.9 million in 4Q16 to $590.2 million in 4Q17, reflecting a 28% rise year-over-year. This rise was mainly the result of a substantial rise in the segment’s performance fees.

The segment generated performance fees of $253.5 million in 4Q16, while in 4Q17, it generated fees of $365.3 million. In 4Q17, the segment’s carrying value rose 6.8%. In 2017, it rose 17.6% because of a rise in the value of its holdings.

The Corporate Private Equity segment’s total AUM (assets under management) stood at $105.6 billion thanks to inflows as well as appreciation.

Blackstone’s dividend yield stands at 6.4% on a trailing-12-month basis. Peers (XLF) Oaktree Capital Management (OAK), Ares Management (ARES), and Ameriprise Financial (AMP) have dividend yields of 7.2%, 3.9%, and 1.9%, respectively.

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Expenses rose year-over-year

The Corporate Private Equity segment’s total expenses rose from $237.3 million in 4Q16 to $298.4 million in 4Q17 mainly due to a rise in interest expenses. The segment incurred interest expenses of $12.9 million in 4Q16 and $19.1 million in 4Q17. The segment witnessed a 33% rise in performance fee compensation from $116.6 million in 4Q16 to $154.5 million in 4Q17.

The Corporate Private Equity segment’s net management and advisory fees stood at $764.4 million in 2017, which represented a 36% rise on a YoY basis. The segment’s 4Q17 realizations stood at $4.4 billion.

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