PRIVATE equity giant Blackstone has shocked investors with the scale of its losses after market turmoil hit the value of its portfolio firms.
The American buyout group also said it had been hit by the Eurozone debt crisis and weak Western economies as it posted a third quarter economic net loss – the basic measure of operating performance – of $342m (£216.55m), compared with a profit of $339m the previous year.
Its private equity division lost $319.5m, down from a £119m profit.
Blackstone has seen its fee-earning assets under management rise 27 per cent, however, to £132.9bn.
Chief executive Stephen Schwarzman (pictured) said: “The third quarter presented extremely challenging market conditions, dominated by risk aversion and volatility.”
The group said it has a record $33.4bn of “dry powder”, or capital available to invest, including money from a new private equity fund.
Over the quarter it invested $4.8bn in total capital, including a deal this week to buy 44 per cent of German camera-maker Leica. Yesterday Schwarzman claimed corporate America had shown a “resilient” performance but said he feared for the future.
“Underwhelming economic data has contributed to an increasing consensus that growth will reduce or reverse.”
Sandler O’Neill analyst Michael Kim said the quarter showed Blackstone’s “strength beneath the surface.”