Blackstone Group Inc.’s
earnings jumped in the second quarter, propelled by record appreciation in the value of its investments.
The private-equity firm posted second-quarter net income of $1.31 billion, or $1.82 a share, it said Thursday. That compares with a profit of $568.3 million, or 81 cents a share, a year earlier.
The value of Blackstone’s private-equity portfolio climbed by 13.8% in the latest period, exceeding the roughly 8% gain for the S&P 500. Combined fund appreciation across its various business lines was the highest in the history of the firm.
Aiding the strong performance was Blackstone’s recent emphasis on putting money into fast-growing companies. Initial public offerings of outsourcing company
and Indian electric-vehicle components manufacturer
pushed up the firm’s private-equity portfolio, while sales of last-mile logistics properties in the U.S. and Australia helped boost its real-estate holdings.
‘The pivot into good neighborhoods has really paid off.’
has encouraged the firm’s business heads to think more thematically about investing, identifying global trends and finding ways to put money to work in areas that would benefit from them. Among these are logistics, software, digital payments and life sciences, areas of the economy that are experiencing outsize growth.
“The pivot into good neighborhoods has really paid off,” Mr. Gray said in an interview.
Investors cheered the results, sending Blackstone’s stock up about 3.5% to $109.57 in morning trading. Its shares, including dividends, have climbed 78% since the beginning of 2021, according to FactSet, trouncing the S&P 500’s roughly 16% gain over the period.
Blackstone’s market capitalization of more than $130 billion now exceeds that of
Goldman Sachs Group Inc.,
the Wall Street giant currently valued at about $127 billion.
“Our forward momentum has never been stronger,” Chief Executive
who has long complained that Blackstone’s stock price didn’t reflect its performance, said on a conference call with analysts.
He called the second quarter “the most consequential” ever for the firm, as it expanded further into the retail and insurance channels. These areas generate so-called perpetual capital, which public investors value because it doesn’t need to be returned as quickly and generates a steady stream of locked-in fees.
Blackstone’s distributable earnings, or the amount of cash that could be returned to shareholders, came in at $1.07 billion, or 82 cents a share, in the quarter. That compares with $548 million, or 43 cents a share, a year earlier.
The firm said it would pay a dividend of 70 cents a share for the quarter, versus 37 cents in the second quarter of 2020.
Blackstone invested $23.8 billion during the second quarter and committed to an additional $28.5 billion, another record. Among its commitments was a June agreement to partner with rivals Carlyle Group Inc. and Hellman & Friedman LLC in a deal for Medline Industries Inc. that values the medical-equipment supplier at more than $30 billion and represents the largest leveraged buyout since the financial crisis.
Blackstone’s infrastructure business and nontraded real-estate investment trust also struck a deal to acquire data-center operator QTS Realty Trust Inc. for $6.7 billion.
The firm had inflows of $37.3 billion in the quarter, with much of that coming from its credit business and its giant Core+ real-estate strategy.
Assets under management rose 21% compared with the previous year, to $684 billion. Perpetual capital climbed 55% year-over-year to $169.5 billion.
That figure is set to rise, thanks in part to a sweeping partnership Blackstone announced last week with insurance company
The investment firm will manage a portion of AIG’s assets and will pay $2.2 billion for a 9.9% stake in its life-insurance and retirement-services unit. The deal is set to push Blackstone’s insurance assets under management to about $150 billion by the end of 2021.
“It really encapsulates the evolution of our business,” Mr. Gray said of the AIG arrangement.
A decade of low interest rates and strong performance has prompted the firm to venture beyond its traditional focus on investing institutional money, he said.
The combined market opportunity in insurance and retail is worth significantly more, he said.
Write to Miriam Gottfried at [email protected]
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