Thursday 19 October 2017

Blackstone Group's second quarter profits drop 62pc

Blackstone Group boss Stephen Schwarzman
Blackstone Group boss Stephen Schwarzman

David Carey and Devin Banerjee

Blackstone Group, the world's biggest private equity firm, said profits fell 62pc in the three months to the end of June as valuations for companies it had taken public declined during a lacklustre quarter for stocks.

Economic net income, a measure of earnings that reflects both realised and unrealised investment gains, fell to $508.4m, or 43 cents a share, from $1.33bn, or $1.15 a share, a year earlier, New York-based Blackstone said yesterday.

Blackstone is an active investor in Ireland and made an estimated €375m profit selling part of its Eircom stake to hedge fund Anchorage Capital earlier this year.

Globally, analysts has expected earnings of 44 cents a share in the second quarter, according to the average of 15 estimates in a Bloomberg survey.

Blackstone, which oversees a record $333bn (€305bn) in private equity, real estate, credit assets and hedge funds, took a hit in a quarter when Greece's debt crisis intensified, Chinese stocks plunged and the Standard & Poor's 500 Index declined 0.2pc. Stakes the firm owns in oil refiner PBF Energy, travel booker Travelport Worldwide and real estate companies Hudson Pacific Properties and Brixmor Property Group were down between 13pc and 18pc.

Blackstone's results "largely reflect weakness in the public portfolio", Dan Fannon, an analyst at Jefferies Group, said in a note to clients last week, referring to companies the firm has taken public and continues to own.

Blackstone fell 1.1pc to $40.87 at 9:32am in New York, paring its gain this year to 21pc. That compares with a 2.9pc year-to-date advance in the S&P 500.

The firm's distributable earnings, which reflect cash gains on sales of holdings, were $1bn, up 35pc from a year earlier. Blackstone notched gains by exiting stakes it held in audience tracker Nielsen, medical devices maker Biomet and Pinnacle Foods, and by cutting its holdings of Hilton Worldwide Holdings and drug tablet maker Catalent.

Run by billionaire Stephen Schwarzman, Blackstone has become the largest private equity real estate investor, more than tripling its money in Hilton. In April, it led a deal to buy $23bn in assets from General Electric, the largest real estate transaction since the financial crisis.

Blackstone will pay a 74 cents a share dividend next month.

Irish Independent

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