Blackstone is betting big on lending out money in the private markets, and the PE giant has $182 billion to do it
TGIF! Dan DeFrancesco reporting for duty from NYC. If you've had a long week at work, just take solace in the fact that you, unlike British Prime Minister Liz Truss, were able to outlast a head of lettuce.
Today we've got former Goldman Sachs' partners teaming up on new endeavors, leaked org charts, and a star who is not happy with Tesla.
But first, can I interest you in a loan?
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1. Blackstone has some money to lend
Blackstone, the world's largest private-equity firm and a big fan of warehouses, reported earnings on Thursday.
The topline numbers were eye-opening, to say the least. Blackstone reported $2.3 million in net income for the quarter, an amount that probably could not cover the monthly mortgage payments of the four Blackstone executives on the earnings call.
By comparison, back in the good ole days (see: Q3 2021), Blackstone reported a profit of $1.4 billion.
Despite such a drastic drop in profit, things are fine, so says Blackstone. Investment performance for its opportunistic real-estate portfolio and corporate private equity were only down marginally, 0.6% and 0.3%, respectively. Meanwhile, its hedge fund solutions business was up 1.2%.
And its assets under management are up 30% in the past year to $951 billion, which puts it just shy of its goal of managing $1 trillion.
Private credit was a point of interest on the earnings call. Blackstone reported its private credit unit was up 3% in the third quarter and 9.3% over the past 12 months.
And it seems there is even more opportunity to grow, as traditional lenders pull back due to concerns over the impending recession.
Blackstone has no shortage of funds to lean into the space, with $182 billion in capital ready to be deployed. It's exactly the kind of war chest you want if things are about to get as bad as everyone seems to think they will.
Jon Gray, Blackstone's president and No. 2 behind cofounder and CEO Stephen Schwarzman, acknowledged as much on Thursday's earnings call.
"With a record $182 billion of dry powder capital, we have the ability to take advantage of dislocations," Gray said, according to a transcript from research provider Sentieo.
It is worth noting there is a noticeable difference between Blackstone's reported returns in private credit versus its liquid credit unit, which is down 4.6% over the past year, as the Financial Times noted.
The major distinction between the two sides is how those numbers are calculated. Blackstone marks its own private-credit book internally, while the liquid credit business is made up of assets that are traded, and priced, in the public markets.
To read more about Blackstone's push into private credit, click here.
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Edited by Jeffrey Cane (tweet @jeffrey_cane) in New York and Hallam Bullock (tweet @hallam_bullock) in London.
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