Blackstone Q1 earnings better than feared

NEW YORK• Bet son Spanish housing and oil assets helped Blackstone Group

LP mitigate stock market jitters that weighed on it in the first quarter, with earnings at the world’s largest manager of alternative assets falling less than expected.

Profits have soared at private equity firms such as Blackstone in recent years, as a U.S. stock market rally allowed them to sell assets for top dollar. That rally came to an end in the first quarter, amid a trade dispute between the U.S. and China.

Blackstone reported a 20-per-cent drop in profit per share on Thursday but still beat Wall Street’s expectations.

“We had a solid start to the year,” chief operating officer Jon Gray said.

Profit per share came in at US65 cents in the quarter, down from US81 cents a year ago. Analysts on average expected US45 cents, according to Thomson Reuters I/B/E/S.

“This backdrop for the first quarter was a bit more challenging than we’ve seen in some time in terms of just the broader markets, but they’ve performed pretty well against that,” said JMP Securities analyst Devin Ryan, who rates the stock “market outperform.”

Blackstone’s assets under management swelled to US$449.6 billion from US$434 billion at year-end 2017, and a 14-per-cent rise in fee-related earnings that are linked to a management fee on the assets held for investors also supported results. Blackstone said it plans to pay a US30-cent special dividend in 2018, returning to shareholders a portion of the proceeds from the conclusion of its partnership with FS Investment Corp.

Shares closed one per cent higher Thursday at US$32.12.

Blackstone presented results for the first time since Gray, formerly its real estate chief, was made president and COO earlier this year, a promotion which set him up as successor to chief executive Stephen Schwarzman.

“I start with a Hippocratic oath: to do no harm,” Gray said. “But I do have a few key areas of focus.”

Gray indicated Blackstone wants to manage more money for retail and insurance investors and bolster growth investments in emerging markets and in areas like life sciences and technology.