(Oct 22): Blackstone, the world's largest alternative asset manager, posted a drop in third-quarter earnings on Thursday, as a turbulent market environment weighed on its ability to cash in on investments.
Global markets have been roiled by surging bond yields, expectations of higher-for-longer interest rates and elevated market volatility from the Iran war.
As a result, many prospective deals are being put on hold, leading to a slowdown in deals and IPOs in the first half of the year. Global M&A activity fell 41% sequentially in the third quarter, according to LSEG data.
Blackstone's net realizations, which track proceeds from investment exits, fell 34% to about US$332 million (RM1.3 billion), weighed down by a nearly 50% drop in its private equity business.
Shares of the company fell 1.2% in pre-market trading.
Its results, however, were cushioned by net inflows of more than US$63 billion, pushing assets under management to US$1.37 trillion and boosting fee-related earnings by 6%.
Blackstone's credit and insurance business marked the largest chunk of new inflows, bringing in nearly US$36 billion, followed by private equity with US$12.6 billion.
Fee-related earnings from managing investments in its private equity funds jumped 26% to US$619 million.
Distributable earnings, or profit available to shareholders, fell 13% to US$1.32 per share.
Alternative asset managers are grappling with a slide in their stock prices this year, as investors turned cautious on prospects of slower future growth and potential disruption from AI advancements on companies in their portfolios.
Private credit in particular has been subject to investor jitters, with large managers reporting a surge in redemption requests over the prior quarters.
Blackstone said last month that requests in its BCRED fund remained elevated in the third quarter, but has maintained that fundamentals of the portfolio remain healthy.
Its shares have plummeted nearly 30% this year, largely in line with other asset managers and compared with a 13% gain in the broader market and about 2% in the S&P 500 Financials index.
Uploaded by Magessan Varatharaja