Published by Global Banking and Finance Review
Posted on April 17, 2025
By Niket Nishant
(Reuters) -Blackstone beat first-quarter profit estimates on Thursday on the back of strong performance from its private equity and credit businesses, but the company's CEO warned that heightened volatility may hamper asset sales in the near term.
The shift in tone marks a sharp reversal from the optimism post the November election, when hopes of deregulation and pro-growth policies under President Donald Trump boosted markets.
Months into his term, investors have been rattled by policy unpredictability, especially related to tariffs.
"Uncertainty around tariffs and their potential impact on economic growth and inflation has dramatically impacted investor sentiment," said CEO Stephen Schwarzman, a longtime Trump backer.
"We believe that fast resolution is critical to mitigate risks and keep the economy on a growth path."
The concerns mirror those raised by other business leaders and economists, who have ramped up their recession warnings after the full scope of the tariffs was revealed on April 2.
Although turbulent markets could limit near-term asset sales, Blackstone sees an opportunity to put its $177 billion in dry powder to work amid growing risk aversion, Schwarzman said.
The company's results emphasize how large alternative asset managers are navigating the challenging environment. While seizing on selective dealmaking opportunities, these firms are also urging swift negotiations to minimize disruption.
Blackstone's distributable earnings, which represent cash that can be used to pay dividends, grew 11% to $1.41 billion, or $1.09 per share, for the three months ended March 31, compared with $1.27 billion, or 98 cents per share, a year earlier.
Analysts had expected $1.05 per share, according to estimates compiled by LSEG.
The company's shares climbed 1.2%. So far this year, Blackstone shares have dropped around 25%, while peers Apollo Global and KKR have declined 24% and 31%, respectively.
CREDIT MOMENTUM CONTINUES
Blackstone drew in $61.64 billion of inflows in the quarter, which helped its assets under management climb 10% to $1.17 trillion.
About half of the inflows were directed into the credit and insurance segment, which offers a broad range of debt financing options to companies.
The world's largest alternative asset manager has positioned itself as a key player in the private credit space. Companies looking for flexible financing options are increasingly turning to investment firms such as Blackstone instead of traditional banks.
Blackstone's private equity arm also performed strongly, with segment distributable earnings rising 13% to $564.6 million. The unit's results were helped by asset sales of $6.5 billion.
The real estate arm, however, continued to be a drag, with AUM declining 6%. Still, tariffs could drive up construction costs and reduce new supply, potentially elevating real estate values if the economy avoids a recession.
"The conversations with institutional limited partners around real estate have really improved over the last six months," President and Chief Operating Officer Jon Gray said, cautioning, however, that the business was still in an early recovery phase.
(Reporting by Niket Nishant in Bengaluru; Editing by Krishna Chandra Eluri)
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