Money manager Blackstone boosts results by paying off big deals

Blackstone, the world’s largest alternative asset manager, capitalized on big deals in the second quarter, alleviating the sting of investment writedowns and the turmoil in the markets.

Distributable earnings for the second quarter rose 86 percent year over year to $2 billion, or $1.49 a share, after the company took profits from large investments, Blackstone said in a statement. That beat the median estimate of $1.47.

Write-downs on holdings, including those related to the technology and industrial sectors, contributed to a net loss of $29.4 million.

Blackstone’s corporate private equity lost 6.7 percent in the quarter.

Credit bets were also down, with liquid credit falling 5.5 percent as leveraged credit markets sold off.

Blackstone shares fell 6.7 percent to $94.28 in New York trading. The stock is down 22 percent this year through Wednesday, compared to the S&P 500’s 17 percent drop.

Blackstone President Jon Gray said he sees a challenge ahead given the Federal Reserve’s rate hikes and the fact that companies are finding it harder to go public and buyout firms are finding it difficult to sell bets for big profits .

“No one is unharmed in this environment,” Mr. Gray said in an interview.

“The Fed’s tightening will lead to an economic slowdown.” It will take time for the Fed to cool down inflation, he said. “It’s a bit like a train that has a lot of momentum and a conductor has to pull back.”

Blackstone is the first of the largest alternative wealth managers to report its second-quarter results.

The firm invests in real estate, corporate take-private deals and high-growth startups, and is a source of corporate funding. With $940.8 billion in assets under management, it’s a force in the world beyond stocks and bonds and a barometer of the health of the industry.

Real estate, the largest division by asset and the largest contributor to distributable earnings, delivered unexpected cash gains in the second quarter.

Blackstone’s real estate arm sold hotel and casino company Cosmopolitan of Las Vegas for $5.65 billion during the period when the company also took profits by moving logistics company Mileway among the portfolios it manages.

Net inflows during the period increased to $73.9 billion from $25.6 billion a year earlier, Blackstone said.

That includes $24.4 billion raised for a new real estate fund that is said to be the largest of its kind at $30 billion.

Under the advanced strategies, the company made a profit on the portfolios of hedge funds it assembles for clients.

The hedge fund unit has undergone a restructuring under new boss Joe Dowling, who took over last year.

Blackstone wagered $47.8 billion last quarter, up from $23.8 billion a year ago. The company is sitting on a record $170 billion worth of dry powder.

In the difficult environment, the company will focus more on how companies are performing now than it was a year ago when looking for new deals, Mr Gray said. Money manager Blackstone boosts results by paying off big deals

Fry Electronics Team

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