Blackstone(US:BX)2024-10-17 16:49Financial Data and Key Metrics Changes - The company reported GAAP net income of $1.6 billion for the quarter, with distributable earnings of $1.3 billion or $1.01 per common share, marking a 7% increase on a per-share basis [6][31] - Management fees increased by 8% year-over-year to a record $1.8 billion, while fee-related earnings were $1.2 billion, up 5% year-over-year [30][31] - Total AUM increased by 10% year-over-year to $1.1 trillion, with inflows of $41 billion in the third quarter and $167 billion over the last 12 months [29] Business Line Data and Key Metrics Changes - In private equity, the company agreed to acquire Smartsheet for $8.4 billion, one of the largest take-privates of the year [18] - The credit business had its second busiest deployment quarter in history, investing over $18 billion, up more than 50% from Q2 [18] - The infrastructure segment reported 5.5% appreciation in Q3 and 18% for the last 12 months, driven by gains in digital transportation and energy infrastructure [32] Market Data and Key Metrics Changes - The company has deployed $123 billion over the last 12 months, doubling the prior year’s comparable period [9] - The commercial real estate sector is showing signs of recovery, with a significant decrease in repurchase requests for BREIT, down over 90% from their peak [13] - The private credit market is expanding rapidly, with the company managing the largest third-party private credit business globally, totaling $432 billion, up 20% year-over-year [21] Company Strategy and Development Direction - The company is focusing on areas such as artificial intelligence, renewable energy, and digital infrastructure, positioning itself as a partner of choice for investors navigating a complex world [10][12] - The firm is committed to a capital-light, brand-heavy model, relying on its track record and brand strength to grow [26] - The company anticipates a material step up in fee-related earnings in Q4, driven by the end of fee holidays for multiple funds [37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the easing of the cost of capital, which is expected to positively impact asset values and transaction activity [8] - The company noted that the current environment is characterized by a profound transformation across the economy and markets, with a strong belief in the long-term growth trajectory of the alternative investment industry [15] - Management expects a more constructive environment for realizations in 2025, with a significant increase in transaction activity anticipated [31][55] Other Important Information - The company has raised $21 billion in the private wealth channel year-to-date, nearly double the amount raised in the same period last year [24] - The firm has closed on EUR1 billion for a new open-ended Europe-focused infrastructure vehicle, indicating strong fundraising momentum [26] - The company has returned 100% of earnings to shareholders over the past seven years through dividends and share repurchases totaling over $30 billion [26] Q&A Session Summary Question: Insurance platform growth and opportunities - Management highlighted the insurance business's growth to $221 billion, up 24% year-over-year, and emphasized strong dialogue with insurance companies regarding strategic partnerships and separate accounts [40][41] Question: Increase in operating expenses - Management explained that the increase in operating expenses was driven by third-party servicer fees and placement fees, with expectations for lower growth in Q4 compared to Q3 [43][44] Question: Asset-backed opportunity sizing - Management estimated the asset-backed market at $25 trillion, with private players currently holding only 1-2% of that market, indicating significant growth potential [48] Question: Investment pipeline and election impact - Management noted that while some investment decisions may be delayed due to the upcoming election, overall buying activity remains strong, with a positive outlook for both real estate and private equity [51][52] Question: Real estate investment outlook - Management confirmed that they have been net buyers in real estate and expect to continue deploying capital in sectors like logistics, rental housing, and data centers [58][59] Question: Fundraising outlook for 2025 - Management expressed optimism about a better fundraising environment in 2025, driven by increased realizations and improved investor sentiment [64]