Blackstone, Inc., the largest private equity firm in the world, has reached the one-trillion dollars benchmark in assets under management (AUM). The firm said it oversees $1.001 trillion, up from $940.8 billion a year earlier.
Blackstone's AUM has grown rapidly in recent years, from $400,000 in 1985 to over $1 trillion today. Stephen Schwarzman and his co-founder Peter G. Peterson left Lehman Brothers to start the private equity firm in 1985, each pitching $200,000. The firm's growth has been driven by a number of factors, including the strong performance of its investments, the increasing popularity of alternative investments, and the firm's expansion into new markets.
Blackstone's AUM is spread across a variety of asset classes, including private equity, real estate, hedge funds, and credit. The firm's largest asset class is private equity, which accounted for $500 billion of AUM as of July 19, 2023. Blackstone's real estate portfolio is also significant, with $300 billion in AUM. The firm's hedge fund and credit portfolios are smaller, but they have also grown rapidly in recent years.
Blackstone’s size and growth have made it a major player in the global financial markets. The firm’s investments have a significant impact on the economy, and its decisions can have a ripple effect across markets. Blackstone is also a major employer, with over 2,000 employees worldwide.
Blackstone crossed the threshold after raising $30.1 billion of new capital in the quarter, leaving behind Brookfield Asset Management Ltd., its biggest rival which has $825 billion in assets. However, Blackstone’s shares dropped 3% in-premarket trading, as investors focused on the earnings decline, according to Reuters.
According to Reuters still, distributable earnings, which represent cash used to pay dividends to shareholders, fell to $1.2 billion from nearly $2 billion a year earlier. This resulted in distributable earnings of 93 cents, only marginally higher than the average analyst estimate. Blackstone said its net profit from asset sales plunged 82% to $388.4 million from $2.2 billion in the year-ago period, as higher interest rates, sticky inflation, and economic uncertainty have continued to weigh on its merger-and-acquisition activity.
Blackstone’s earnings have been strong in recent years, however. In the fourth quarter of 2022, the firm reported net income of $601.3 million, or 79 cents per share. This was up from a net income of $29.4 million, or 4 cents per share, in the fourth quarter of 2021.
Blackstone's earnings have been driven by the strong performance of its investments. The firm's private equity portfolio has generated strong returns in recent years, and its real estate portfolio has also performed well. Blackstone's credit portfolio has also performed well, despite the recent volatility in the credit markets. The current drop in earnings is a mere setback.
The firm's investment portfolio is well-positioned for growth, and its fee income is expected to continue to grow. As a result, Blackstone is well-positioned to continue to generate strong earnings in the years to come.