Blackstone profit tops view; sees more deals ahead

By Megan Davies

NEW YORK (Reuters) - Private equity firm Blackstone Group LP (BX.N) posted a forecast-beating quarterly profit on Friday and said it is gearing up for more deals and IPOs as the lending and equity markets recover.

The company, which has immense real estate and private equity assets, has stepped up deal activity in the past few months, including buying Anheuser-Busch InBev's (ABI.BR) U.S. theme parks for up to $2.7 billion.

It is also considering initial public offerings for a number of its companies as well as selling to strategic buyers, and expects the IPO window to stay open at least until the beginning of next year.

"Our pipeline of new deals is growing substantially," Blackstone Chief Operating Officer Tony James said on a conference call.

He said Blackstone has $27 billion of "dry powder" -- capital available for investment. The lion's share is in its real estate and private equity funds.

It is the latest sign of improvement in the private equity industry, which has struggled to keep portfolio companies healthy during the recession and has had limited access to financing for new deals.

On Thursday the biggest leveraged buyout this year was struck: Blackstone rival TPG TPG.UL and the Canada Pension Plan agreed to buy IMS Health Inc (RX.N) for $4 billion.

Blackstone's third-quarter earnings before income taxes, noncash charges for vesting equity-based compensation, and amortization of intangible assets -- a measure it calls "economic net income" (ENI) -- were $278.4 million, compared with a loss of $509.3 million a year earlier.

On an after-tax basis, ENI was 25 cents a share. Analysts expected, on average, 15 cents a share, according to Thomson Reuters I/B/E/S/.

The value of Blackstone's private equity portfolio rose by 5 percent in the third quarter, although the value of its real estate portfolio fell by 0.4 percent.

Blackstone shares were up 6.4 percent to $14.76 in afternoon trading. The shares have doubled in price this year, and the company is currently valued at $15.6 billion. It went public in June 2007 at $31 a share.

Rival hedge fund and private equity firm Fortress Investment Group LLC (FIG.N) posted a quarterly loss on Friday, and its shares sank 3.5 percent.

NO GUNS TO HEAD

Private equity firms have had an uphill battle keeping debt-laden portfolio companies healthy during the recession. They also face the looming issue that debt taken on during the boom years 2005-07 will have to be refinanced in coming years.

Blackstone said it has been taking advantage of the improved debt markets to restructure investments in its portfolio.