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Blackstone bounds into black with surprise earnings boost

City A.M. Reporter
PRIVATE equity giant Blackstone Group posted better-than-expected earnings yesterday, driven by increased performance fees and improved valuations of its portfolios.

Private equity firms suffered in 2008/9 from sliding stock markets, which reduced the values of their investments, and from the limited availability of credit for new deals. But both have improved, with valuations higher and increased debt available for new deals.

“The availability of debt for... new transactions is back to normal, perhaps even above normal in terms of leverage levels,” said Blackstone’s chief operating officer Tony James, although he stressed that was for mid-sized deals.

Blackstone said it marked its portfolio up seven per cent for the quarter and up 12 per cent for the year. Despite a 31 per cent drop in 2008, Blackstone’s private equity portfolio is marked at 1.3 times its cost, it said.

Blackstone’s fourth-quarter economic net income (ENI) was $329m (£216m), compared with a loss of $764m a year earlier. For the full year, ENI rose to $703m, from a loss of $1.2bn for 2008. It shares ended one cent down at $13.99.