By Miriam Gottfried 

Blackstone Group Inc. swung to a record quarterly profit as its focus on rapidly growing companies helped the value of its investments climb more than the broader market.

The investment giant posted net income of $1.75 billion, or $2.46 a share, for the first quarter. That compares with a loss of $1.07 billion, or $1.58 a share, in the coronavirus-battered first quarter of 2020.

The value of Blackstone's private-equity portfolio climbed by 15.3% in the latest period, far exceeding the 5.8% gain for the S&P 500. The firm's recent emphasis on growth companies, including online-dating platform Bumble Inc. and genealogy company Ancestry.com Inc., propelled the gains, Blackstone President Jonathan Gray said in an interview.

The growth orientation, a product of Mr. Gray's push to encourage his firm's business heads to identify global trends and invest in companies that stand to benefit from them, has led Blackstone to put more money into areas such as logistics, business software, digital payments and life sciences -- industries that performed well during the pandemic.

"We feel as good about the business as we've ever felt in terms of the performance of the business and the response from our customers," Mr. Gray said.

Shares of Blackstone rose 4.7% in afternoon trading Thursday, pushing its market capitalization past $100 billion for the first time.

The firm made a number of investments during the quarter pegged to the return of travel as the pandemic subsides.

In January, it announced a deal to acquire U.K. vacation company Bourne Leisure Holdings Ltd. The following month, it teamed up with Global Infrastructure Partners and the family office of Bill Gates in a $4.7 billion deal for private-jet base operator Signature Aviation PLC. Last month it joined with Starwood Capital Group in a $6 billion deal for hotel owner and operator Extended Stay America Inc., which has been a rare bright spot for the lodging industry during the pandemic.

"What we're beginning to see is growth in the physical world," Mr. Gray said on a call to discuss the earnings Thursday. There has been "record slots activity" at the Cosmopolitan in Las Vegas, a Blackstone-owned property, he said. "In our infrastructure business, our ports company saw more volume than it's ever had in a month, well up from 2019 levels."

Mr. Gray said Blackstone has remained vigilant about the potential for inflation as the economy reopens.

"The key is to buy things where the growth is substantial and can outrun" pressure on valuations due to inflation, Mr. Gray said.

Blackstone's distributable earnings, or the amount of cash that could be returned to shareholders, came in at $1.19 billion, or 96 cents a share, in the first quarter. That compares with $557.1 million, or 46 cents a share, a year earlier.

The firm realized $8.1 billion in proceeds from asset sales in the quarter, including from the February initial public offering of Bumble, the $9 billion merger of Paysafe Group Holdings Ltd. with a blank-check company, and sales of insurance broker Acrisure LLC and electric utility GridLiance.

The private-equity giant said it would pay a dividend of 82 cents a share for the quarter, versus 39 cents a year earlier.

Blackstone's fee-related earnings climbed 58% year over year, to $740.8 million. The biggest contributor to fee-related earnings was its Core+ real-estate strategy, which buys stable assets, using moderate amounts of debt and has a long investment horizon. The business had $77 billion in assets at the end of the first quarter, Blackstone said Thursday.

The firm had inflows of $31.6 billion during the quarter, bringing total assets under management to $648.8 billion, up from $618.6 billion at the end of 2020 and $538 billion a year earlier. Blackstone has set a goal $1 trillion in assets by 2026.

So-called perpetual capital, which generates a steady stream of locked-in fees because it doesn't need to be returned to investors as quickly, reached $149.1 billion, up 47% from over the first quarter of 2020.

Write to Miriam Gottfried at Miriam.Gottfried@wsj.com

 

(END) Dow Jones Newswires

April 22, 2021 13:47 ET (17:47 GMT)

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