Because of a fall in markets - and the value of its portfolio companies, Blackstone reported a $319 million loss in its private equity portfolio, which it calls economic net income. It contrasts to a year earlier when companies it held were rising in value and primed for IPO's or mergers - in the third quarter of 2010, its private equity arm earned $111.9 million.
In its credit business where it's recently made acquisitions for a push into European debt, revenue fell 89% to $15.4 million from this time last year.
Nevertheless, investors looking for company buyout earnings higher than bond yields or stocks continue to pump money into private equity funds. Blackstone announced that fee-earning private equity assets under management increased 52% to $37 billion as a result of opening its BCP VI fund and net inflows of money.
A bright spot were its fee earning revenue, which overall gained 18% to $442 million in the third quarter. Base management fees and transaction fees were boosted by some investments that are now profitable and that earn fees.If deal making volumes recover, Blackstone may play a big role in takeovers. Overall, across its divisions, assets under managemen rose to $157.7 billion, from $119.1 billion. In addition, the company reported it's sitting on $16.9 billion in "dry-powder" -- meaning unused cash for new buyout investments. Volatile markets arent just impacting private equity, on Tuesday, Goldman Sachs (GS) reported its second ever quarterly loss as a public company. JPMorgan (JPM), last week, reported a nearly 50% drop in its investment banking fees, leading to its worst investment bank earnings since the financial crisis when excluding debt adjustments. -- Written by Antoine Gara in New York
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