By Chibuike Oguh
(Reuters) -Blackstone Inc on Thursday said distributable earnings rose by 55% to a record high, as the world's largest manager of alternative assets took advantage of rising markets to sell assets for top dollar.
Private equity dealmaking pushed global mergers and acquisition activity to an all-time high in 2021, fueled by an abundance of cheap capital and soaring corporate valuations.
But prospects for M&A activity are more uncertain this year, with public markets paring back recent gains amid rising inflation, proposed interest rate hikes, and an end to the Federal Reserve's bond buying program, which was reaffirmed by Fed chair Jerome Powell in a speech on Wednesday.
Blackstone (NYSE:BX) said its outlook remains positive even in the current environment because of the quality of its portfolios, the long duration of its capital, and the scale of its fundraising.
"It's possible as markets trade off a lot, you'll see some slowdown. But I would say overall, we're continuing to see very positive momentum, and our outlook is quite good," Blackstone President Jonathan Gray said during a call with analysts on Thursday.
RECORD EARNINGS
Blackstone said its distributable earnings, which represents the cash used to pay dividends to shareholders, surged to a record $2.3 billion from $1.7 billion a year earlier. That resulted in distributable earnings per share of $1.71, which surpassed the average Wall Street analyst estimate of $1.37, according to financial data provider Refinitiv.
During the quarter, Blackstone said it spent a record $65.8 billion to acquire new assets across its real estate, credit, private equity, hedge funds portfolios.
Those deals included a $5.1 billion purchase of affordable housing units from American International Group Inc (NYSE:AIG), the acquisition of majority stake in garage-door equipment maker Chamberlain Group, and the take-private of Canada's WPT Industrial Real Estate Investment Trust.
Blackstone said it generated $21 billion from cashing out investments, including the sale of sub-prime auto lender Exeter Finance to private equity firm Warburg Pincus and the divestment of jeweler Diamond Direct to Signet Jewelers (NYSE:SIG) Ltd in a $490 million transaction.
Blackstone's private equity funds appreciated by 4.8% in the quarter, compared with a 10.7% gain in the benchmark S&P 500 stock index over the same period. Opportunistic and core real estate funds rose 12% and 7.2%, respectively.
Total assets under management rose to a record $881 billion, up 21% from the $730.7 billion posted three months earlier owing to a record amount of fundraising.
As a result, Blackstone said it now expects to reach its goal of managing $1 trillion in assets this year, much earlier than a previously announced target of 2026. Its unspent capital stood at $135.8 billion.
Blackstone declared a quarterly dividend of $1.45 per share.