Blackstone's AUM Crests $361B as Dry Powder Hits Record

Oct 27 2016 | 9:09pm ET

Assets under management at Stephen Schwarzman's Blackstone Group have risen 8.1% in the past 12 months to a record $361 billion, according to the firm's third-quarter release, while earnings beat expectations and the firm's "dry powder" - i.e. cash on the sidelines waiting for a home - hit a staggering $100 billion.

The world’s largest alternative asset manager also earned a stronger-than-expected income for the period. Blackstone’s economic income – a metric that accounts for unrealized investment performance – rose to $687 million in the third quarter, or $0.57 per share, compared to a loss of $416 million in last year’s comparable period. Wall Street analysts expected $0.48 per share for the quarter, according to Bloomberg.

Despite headlines suggesting a mass exodus of capital from alternative investment firms, Blackstone reported $14.7 billion in inflows during the quarter and $68.5 billion in the twelve months through September 30, according to a statement. 

Blackstone’s Private equity assets under management was flat in the quarter and up 9% from last year’s comparable period, while hedge funds AUM within the company’s Blackstone Alternative Investment Management unit was $70.1 billion at the end of the third quarter, up 2.2%. Credit AUM rose 5.4% from the second quarter to reach $89 billion. 

Illustrating the sparse deal environment cited by private equity managers since the middle of this year, Blackstone’s uncalled capital it has yet to put to work reached $100 billion last quarter and is up 20% since this time last year. $33 billion of the dry powder is in the company’s real estate division alone.

Companies like Blackstone have been broadly squeezed by inflated asset prices on the one hand and the rock-bottom interest rate environment on the other, making it difficult to generate double-digit investment returns. Investors seem to grasp the situation – despite record AUM and rising earnings, Blackstone’s stock price has fallen 26% over the past year.  

“I look forward to the day when public markets catch up to our limited partners with respect to Blackstone’s stock, and afford us a premium value,” said Schwarzman during the company’s conference call on Thursday.

Founded in 1985 by Steven Schwartzman and Peter Petersen, Blackstone is the world’s largest alternative asset manager, active in global private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds.

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