* Total assets under mgmt up 21 pct to $248 bln at end-Sept
* Q3 ENI/share 56 cents versus Street view of 55 cents
* Q3 distributable earnings up 59 percent to $312.7 million
By Greg Roumeliotis and Ilaina Jonas
Oct 17 Blackstone Group LP, the largest
publicly listed alternative asset manager, said on Thursday it
had nearly $20 billion of its assets in companies that have
filed to go public as it seeks to capitalize further on strong
Blackstone, which took SeaWorld Entertainment Inc
public this year and is preparing to take Hilton Worldwide
Holdings Inc public next year, said realizing investments helped
it generate 59 percent more cash to pay dividends in the third
quarter than a year earlier.
"The pipeline for realizations is really growing. The
potential, although nothing is guaranteed, obviously is very
high for large amounts of realizations and consequent gains,"
Blackstone chief executive and co-founder Stephen Schwarzman
told analysts on a conference call held to discuss earnings.
Blackstone's headline earnings metric rose 3 percent in the
third quarter, edging past analysts' expectations. Blackstone
shares rose 0.6 percent in afternoon trading on the New York
Stock Exchange. They are up more than 73 percent year-to-date,
outperforming a 21 percent rise in the S&P 500 index.
Over the last 12 months, Blackstone's asset sales totaled
$26 billion, dwarfing the $8 billion reported over the 12 months
preceding that period, Schwarzman said.
More is to come through initial public offerings (IPOs),
Blackstone said. At the end of the third quarter, 31 percent of
Blackstone's private equity assets and only 1 percent of real
estate investment assets were public. But if the companies on
file go public at current valuations on paper, private equity
assets will be nearly 50 percent public and real estate will be
40 percent public, Blackstone chief financial officer Laurence
Tosi said on the call.
Blackstone's real estate business had $1.6 billion of
proceeds in the third quarter from asset sales while its private
equity arm had $2.5 billion of proceeds.
Among real estate exits in the third quarter was a sale of
the majority of a U.S. shopping center portfolio it acquired
just last year. Blackstone's almost doubled its $350 million
investment there, Schwarzman said.
In private equity, Blackstone sold its remaining stake in
TRW Automotive Holdings Corp, a car safety equipment
maker it invested in more than 10 years ago. The sale earned
Blackstone about seven times its money, even though the value of
that investment plunged in 2009 to 15 cents on the dollar in the
aftermath of the financial crisis, Schwarzman said.
Blackstone's real estate holdings rose in value by 5.8
percent and accounted for 65 percent of earnings. Private equity
assets rose by 4.2 percent, contributing only 13 percent, as the
value of some of publicly traded investments fell.
RAISED MORE THAN OTHER FOUR COMPETITORS COMBINED
Blackstone said economic net income (ENI), a measure of
profitability that takes into account the mark-to-market
valuation of its portfolio, was $640.2 million, up from $621.8
million in the third quarter of 2012.
Distributable earnings, or actual cash available to pay
dividends, rose by 59 percent to $312.7 million, with private
equity and real estate contributing almost equally.
Total assets under management hit a record $248 billion at
the end of September, up 21 percent year on year. Fee-earning
assets under management rose 12 percent to $188.7 billion.
"Over the past few years, we have raised more capital than
our four closest competitors combined. It's almost really hard
to imagine," Schwarzman said.
Schwarzman said Blackstone had raised $2 billion for its
first Asian real estate fund, which is targeting $4 billion, and
1.4 billion euros ($2 billion) for its fourth European real
estate fund that is targeting 5 billion euros.
Blackstone's tactical opportunities strategy, which invests
across its private equity, real estate, credit and hedge fund
platforms, has now raised $4.4 billion from investors,
Strategic Partners, a private equity secondaries business
that Blackstone acquired from Credit Suisse in August, has
started raising its sixth fund targeting at last $3 billion,
Blackstone declared a quarterly distribution of 23 cents per
Asked whether Blackstone was affected by regulators'
increased scrutiny of Wall Street, Schwarzman said his firm did
not take people's deposits and does not rely on the Federal
Reserve or the government.
It therefore does not face such regulatory risks and in fact
stands to benefit from financial institutions shedding assets
and losing employees which it can poach. Nevertheless,
Blackstone takes regulatory compliance seriously, Schwarzman
Earlier, Blackstone President Tony James told reporters on
another conference call that chief executives of companies
controlled by Blackstone saw little impact as a result of the
U.S. government shutdown which ended on Thursday.