Blackstone Notches Record $1.75 Billion Profit as Growth Strategy Pays Off -- 2nd Update
April 22 2021 - 5:44PM
Dow Jones News
By Miriam Gottfried
Blackstone Group Inc. swung to a record quarterly profit as its
focus on rapidly growing companies helped the value of its
investments climb more than the broader market.
The investment giant posted net income of $1.75 billion, or
$2.46 a share, for the first quarter. That compares with a loss of
$1.07 billion, or $1.58 a share, in the coronavirus-battered first
quarter of 2020.
The value of Blackstone's private-equity portfolio climbed by
15.3% in the latest period, far exceeding the 5.8% gain for the
S&P 500. The firm's recent emphasis on growth companies,
including online-dating platform Bumble Inc. and genealogy company
Ancestry.com Inc., propelled the gains, Blackstone President
Jonathan Gray said in an interview.
The growth orientation, a product of Mr. Gray's push to
encourage his firm's business heads to identify global trends and
invest in companies that stand to benefit from them, has led
Blackstone to put more money into areas such as logistics, business
software, digital payments and life sciences -- industries that
performed well during the pandemic.
"We feel as good about the business as we've ever felt in terms
of the performance of the business and the response from our
customers," he said.
Shares of Blackstone rose strongly Thursday, pushing its market
capitalization in midday trading past $100 billion for the first
time. They closed up 3.3% at $82.96.
The firm made a number of investments during the quarter pegged
to the return of travel as the pandemic subsides. In January, it
said it would acquire U.K. vacation company Bourne Leisure Holdings
Ltd. The following month, it teamed up with Global Infrastructure
Partners and the family office of Bill Gates in a $4.7 billion deal
for private-jet base operator Signature Aviation PLC. Last month,
it joined with Starwood Capital Group in a $6 billion deal for
hotel owner and operator Extended Stay America Inc., which has been
a rare bright lodging spot during the pandemic.
"What we're beginning to see is growth in the physical world,"
Mr. Gray said on a call to discuss the earnings Thursday. There has
been "record slots activity" at the Cosmopolitan in Las Vegas, a
Blackstone-owned property, he said. "In our infrastructure
business, our ports company saw more volume than it's ever had in a
month, well up from 2019 levels."
Mr. Gray said Blackstone has remained vigilant about the
potential for inflation as the economy reopens. "The key is to buy
things where the growth is substantial and can outrun" pressure on
valuations due to inflation, he said.
Blackstone's distributable earnings, or the amount of cash that
could be returned to shareholders, came in at $1.19 billion, or 96
cents a share, in the first quarter. That compares with $557.1
million, or 46 cents a share, a year earlier.
The firm realized $8.1 billion in proceeds from asset sales in
the quarter, including from the February initial public offering of
Bumble, the $9 billion merger of Paysafe Group Holdings Ltd. with a
blank-check company, and sales of insurance broker Acrisure LLC and
electric utility GridLiance.
The private-equity firm said it would pay a dividend of 82 cents
a share for the quarter, versus 39 cents a year earlier.
Blackstone's fee-related earnings climbed 58% year over year, to
$740.8 million. The biggest contributor to fee-related earnings was
its Core+ real-estate strategy, which buys stable assets, using
moderate amounts of debt and has a long investment horizon. The
business had $77 billion in assets at the end of the first quarter,
Blackstone said Thursday.
The firm had inflows of $31.6 billion during the quarter,
bringing total assets under management to $648.8 billion, up from
$618.6 billion at the end of 2020 and $538 billion a year earlier.
Blackstone has set a goal $1 trillion in assets by 2026.
So-called perpetual capital, which generates a steady stream of
locked-in fees because it doesn't need to be returned to investors
as quickly, reached $149.1 billion, up 47% from over the first
quarter of 2020.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
April 22, 2021 17:29 ET (21:29 GMT)
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