The Blackstone Group used the first quarter of 2014 to rack up exits, deploy capital aggressively in new investments and wrap up a number of fundraising efforts.
The firm’s private equity arm generated $4.7 billion of realisations during the first quarter of 2014, more than double the $2 billion Blackstone realised during the same period last year, according to the firm’s Q1 earnings call. Blackstone’s total exit activity during the past 12 months generated $12.3 billion, up from $4.6 billion during the previous 12-month period.
The firm also deployed or committed $7.4 billion during the first three months of the year and $21.6 billion during the past 12 months. In private equity, Blackstone invested $3.1 billion during the quarter and $6.2 billion during the past 12 months. Private equity dry powder stood at $18.6 billion at the end of the quarter, less than half of the firm’s overall dry powder of $48 billion across all segments.
On the fundraising front, Blackstone raised an additional $510 million for its Tactical Opportunities division during the quarter, bringing the total raised to $5.6 billion, and also raised $854 million for its Strategic Partners secondary fund of funds, which closed last week on $1.5 billion.
Private equity revenues for the quarter rose 115 percent to $484 million, while performance fees for the quarter rose by more than 400 percent to $287 million, up from $56 million during the first quarter of 2013.
Blackstone generated economic net income – a measure of earnings that includes realised and unrealised investments – of $814 million during the quarter, up 30 percent year over year.
The value of Blackstone’s private equity, tactical opportunities and other fund investments appreciated by 7 percent during the quarter and 27 percent during the last 12 months, driven by investments in the healthcare and services sectors and public holdings.
GSO Capital Partners' first quarter revenues fell by 7 percent from Q1 2013 totals. Blackstone’s credit arm attributed the declines to a decrease in performance fees.
“Revenues declined in the quarter … due to performance fees coming in below last year’s very high levels,” said firm president Tony James during a media call.
In addition to discussing his firm’s performance, James also addressed the myriad regulatory issues that arose in recent weeks as conversations surrounding the tax treatment of carried interest and the deductibility of interest payments, as well as a possible tightening of regulations pertaining to banks’ issuance of leveraged loans, intensify.
“There are a bunch of things out there that could happen. However, given the gridlock in Washington, I’m not sure anything much could happen,” James said.
“Whatever they do down there won’t affect the way we do business.”
Blackstone ended the first quarter with a record $272 billion under management, up 25 percent year over year.