Blackstone announces 3Q loss on drop in valuations
The Blackstone Group posted a loss of $341.9 million in the third quarter compared with a $339.3 million profit a year earlier. The disappointing results came as the private equity firm saw an 11% drop in the value of its buyout holdings amid ongoing global economic uncertainty.
KKR and Apollo Global Management are scheduled to announce their third-quarter reports next month.
Tony James, Blackstone's president, said that most plans for IPO of portfolio companies had been put on hold, although he noted that the volatility had increased investment opportunities, notably in real estate, debt financing and in Europe, Bloomberg reported. "Our general economic view is stagnation, slow, not falling apart, but certainly not much in the way of growth," James said. "I candidly expect a continuation of the environment we're in."
The value of leveraged buyouts globally fell 33% quarter-on-quarter to $23.2 billion in the third quarter from the second, data compiled by Bloomberg shows, amid signs that banks were hesitant to finance deals because of Europe's debt crisis and a slowdown in U.S. economic growth.
Blackstone has 70 portfolio companies worldwide with combined annual revenue of about $115 billion. The company has also invested more than $7 billion in real estate this year, and has raised $4 billion for its latest property fund that the firm expects to exceed $10 billion.
Performance fees, including carried interest, and investment income were both in deficit for the third quarter. Fee-earning assets under management rose to $132.9 billion from $129 billion at the end of the previous quarter. Blackstone had $33.4 billion in dry powder as of September 30.
The company's most recent Asian investment was the purchase of Antares Restaurant Group, which operates the Burger King franchise in New Zealand, from Anchorage Capital Partners. Blackstone has also been prolific in Australia real estate in recent months, acquiring debt-burdened Valad Property Group and the US assets of Centro Properties Group.
Elsewhere, the company exited its first property in China, selling its 95% stake in Shanghai's Channel 1 shopping mall to New World Development for RMB1.46 billion ($229 million), while Akhil Gupta, who heads of Blackstone's India operations, said the company has the capacity and ability to deploy $500-800 million every year in the country.
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