Real estate, private equity lead record capital deployment. Firm sees growth opportunities despite pandemic challenges.
Blackstone Group Inc. deployed a record $25.4 billion in the fourth quarter, as the world’s biggest alternative asset manager sealed large deals and found opportunities in an economy ravaged by the Covid-19 pandemic.
New York-based Blackstone spent $11.7 billion on real estate in the three months ended Dec. 31, and its private equity unit invested $8.2 billion, the firm said in a statement Wednesday announcing their fourth-quarter earnings. The moves show that company’s leaders are making big bets after sitting out the early stages of the pandemic.
The statement also showed record assets under management and distributable earnings for the period.
“It was our best quarter in the 35-year history of the firm,” Blackstone President Jon Gray said in an interview.
Shares rose 0.1% at 12:09 p.m. in New York. The S&P 500 was down 1.8%.
The deploymnent strategy echoes Blackstone’s approach in 2009 when it invested amid the financial crisis and pulled off deals that helped power its rise over the past decade. While the U.S. stock market has been soaring, assets from commercial real estate to travel are struggling as lockdowns and social distancing rules have changed the patterns of everyday life from Los Angeles to Shanghai.
The firm continued to bolster its business units, with $32.3 billion of inflows in the last three months of the year. Deals such as Ancestry.com Inc. and the recapitalization of BioMed Realty Trust Inc. helped to shrink piles of cash that have been sitting on the sidelines. Blackstone said Tuesday it would buy a life insurance business from Allstate Corp., adding $27.9 billion in assets to its roster.
The company’s distributable earnings jumped 60% from a year earlier to $1.5 billion, or $1.13 a share, beating the average estimate of 91 cents among 19 analysts surveyed by Bloomberg. Fee-related earnings rose 36%.
Among other highlights:
- Funds posted gains across the firm’s segments last quarter, with private equity and tactical opportunities vehicles up about 11%.
- Assets under management climbed 8% from a year earlier to $618.6 billion at the end of December. Fee-earning assets rose 15% while perpetual capital increased 30%.
- Last quarter’s inflows brought the full-year total to $95 billion. The credit and insurance and real estate units took in the most cash, followed by private equity, in the fourth quarter.
By Heather Perlberg
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