By Miriam Gottfried 

Blackstone Group Inc. posted slightly higher net earnings for the third quarter as its focus on technology-related investments helped its private-equity portfolio rise above already-buoyant broader markets.

Blackstone posted net income of $794.7 million, or $1.13 a share, for the third quarter. That compares with a profit of $779.4 million, or $1.15 a share, a year earlier.

The value of the New York firm's private-equity portfolio climbed by 12.2%, compared with an 8.5% increase in the S&P 500 during the period. That marked Blackstone's second straight quarter of greater-than-12% appreciation for the portfolio, a dramatic reversal from the first quarter, when coronavirus-related market turmoil pushed valuations down by 21.6%.

Blackstone's recent emphasis on putting money to work in fast-growing companies -- a key aspect of President Jonathan Gray's strategy for navigating expensive markets -- has fueled the gain.

"The big drivers for us were the technology-oriented investments that we own," including dating app Bumble, data provider Refinitiv and warehouses used for e-commerce, Mr. Gray said in an interview. "It's these on-theme investments that drove the performance in the quarter."

Blackstone's distributable earnings, or the amount of cash that could be returned to shareholders, came in at $772.1 million, or 63 cents a share, in the third quarter. That compares with $709.9 million, or 58 cents per share, a year earlier.

The firm's fee-related earnings climbed 39% year-over-year to $610.9 million as the real-estate and private-equity funds it finished raising last year began to generate fees. So-called perpetual capital, which generates a steady stream of locked-in fees because it doesn't need to be immediately returned to investors, reached $115.2 billion, up 19% over the third quarter of 2019.

Assets under management were roughly $584 billion, up from about $564 billion at the end of the second quarter and $554 billion a year earlier. Blackstone has set a goal of reaching $1 trillion in assets by 2026.

Blackstone raised $15.1 billion during the quarter, and it began to shovel away at its mountain of unspent cash. In August, the firm said it was buying genealogy-research company Ancestry for $4.7 billion, including debt. Blackstone also struck a deal to buy Takeda Consumer Healthcare Company Ltd., a subsidiary of Japanese drugmaker Takeda Pharmaceutical Company Ltd.

The firm was able to take advantage of rising markets by exiting some of its investments, including the $7 billion sale of its 42% stake in Cheniere Energy Partners LP to Brookfield Infrastructure Partners LP and Blackstone's own infrastructure funds. While it happened after the third quarter ended, the firm also recapitalized its investment in BioMed Realty, selling the portfolio of life-sciences buildings to another one of its funds for $14.6 billion.

Both Cheniere and BioMed rank among the firm's most-profitable deals of all time.

"Some have been worried about real estate, but not all real estate is created equal," Mr. Gray said. "Our biggest office holdings, for example, are life-sciences offices."

Blackstone said it would pay a dividend of 54 cents a share, versus 49 cents a year earlier.

Write to Miriam Gottfried at


(END) Dow Jones Newswires

October 28, 2020 07:14 ET (11:14 GMT)

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