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What Could Impact Blackstone’s Private Equity Business?

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Recent performance

In the first quarter, Blackstone Group’s (BX) private equity division garnered total revenues of $681.1 million, a substantial rise on a YoY basis. This rise was mainly due to total management and advisory fees (net) as well as performance revenues. In the first quarter, valuations were stretched, which impacted deployments.

The higher volatility in the market was also evident in the first quarter, and it impacted the private equity segment’s realizations. Thus, moving forward, any global event that adversely affects the market’s performance is likely to negatively impact the segment’s performance. In the first quarter, the segment’s total management and advisory fees (net) saw a rise of 6% on a YoY basis mainly because of base management fees.

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What to expect moving forward

The private equity segment’s base management fees depend mainly on the fee-generating assets under management. In the second quarter, a fall in deployment activities is expected sequentially primarily due to higher valuations. During the same period, Blackstone and its peers (XLF) like KKR & Company (KKR), Carlyle Group (CG), and Apollo Global Management (APO) are expected to witness a decline in their inflows sequentially primarily due to global concerns regarding trade wars.

Global tensions also impact the performance of Blackstone’s portfolio companies. In the first quarter, the private equity segment’s total principal investment income witnessed a YoY decline of 42% mainly because of the performance of investment holdings.

Next, let’s see what could impact Blackstone’s credit segment.

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