Blackstone profits fall back as volatile markets hit assets

City A.M. Reporter
BLACKSTONE Group, the largest publicly listed alternative asset manager, said yesterday its second-quarter earnings had dropped as challenging public markets eroded the value of its assets and crimped its lucrative performance fees.

The firm’s earnings, however, still beat market expectations as its assets proved resilient in a market slump caused by the Eurozone debt crisis and fears over global economic growth, and as the firm generated more cash by exiting investments.

Blackstone, whose investments include the Weather Channel, Pinnacle Foods and SeaWorld Parks & Entertainment, reported that economic net income (ENI), a metric of its profitability that takes into account the market valuation of its portfolio, fell 74 per cent from a year earlier to $212m (£134.8m).

“In an environment characterised by slowing global growth and heightened investor caution, our limited partner investors are entrusting us with a greater share of their capital,” Blackstone chief executive Stephen Schwarzman said in a statement.

Distributable earnings, which show cash available to pay dividends, slipped one per cent to $188m. Fee-related earnings, usually the most reliable source of profits, dropped seven per cent to $146m, dragged down because transaction fees were down 15 per cent on lower deal activity.

Dry powder, the firm’s ammunition for new deals around the world, was $36bn at the end of the second quarter, with $16.4bn available to buy companies and $12.3bn on hand to invest in real estate, Blackstone said.

Blackstone’s assets under management were $190bn as of the end of June, little changed from the previous quarter. Fee-earning assets under management were also steady at $158bn, albeit at a record.