Alternative asset manager Blackstone (BX) is hurting from higher interest rates and the effects of geopolitical tensions on markets, reporting dips in both its asset sales and distributable earnings. But with a record amount of money ready to invest, the firm is well-placed to take advantage of a dislocated environment, according to its CEO Stephen Schwarzman.
Factors such as economic uncertainty, fiscal deficits and labor unrest have slowed down deal-making, said Schwarzman today (Oct. 19) during a Blackstone earnings call. “The environment today is less favorable for realizations, so we’ve chosen to sell less,” he added.
For its third quarter earnings in 2023, the asset manager saw its distributable earnings, or funds available to pay dividends to shareholders, fall to $1.2 billion, a 12 percent decrease from nearly $1.4 billion during the same period in 2022. Meanwhile, its quarterly asset sales were down 36 percent to $260 million.
But the firm did report an increased net income of nearly $522 million compared to $2.3 million in the third quarter of 2022, alongside a rising revenue of $2.54 billion from $1 billion during the same time last year. Blackstone additionally amassed $200 billion in dry powder, or money available for investment. “While the market environment will undoubtedly present challenges, it will also provide opportunities we are well positioned to capitalize upon with over $200 billion of dry powder,” said Schwarzman.
A focus on digital infrastructure and energy transition
Blackstone also saw its infrastructure funds appreciate by 11 percent. This will be a key area of focus going forward, according to Jonathan Gray, the asset manager’s president and chief operating officer, who noted that the company’s infrastructure platform has grown to $40 billion in five years. “Given the immense funding needs for infrastructure projects globally and our performance, we believe this could be a $100 billion business over time,” he said during the conference call, highlighting digital infrastructure and energy transition as notable sectors to watch.
In the past quarter, the firm has also hit several benchmarks. In July, Blackstone became the first alternative asset manager to reach $1 trillion in assets, achieving the goal three years earlier than the firm had originally predicted.
Last month, the company also became the first alternative asset manager to join the S&P 500. The stock market index, which had previously barred companies with multiple share classes, is “the largest benchmark index and the last one that Blackstone was not yet a part of following our conversion to a corporation in 2019,” said Schwarzman. “This milestone is a further reflection of the firm’s leadership position in our industry and the broader market.”