Key Takeaways
- • Blackstone's net realisations fell 34% to approximately $332m in the third quarter, with its private equity business down nearly 50%, as higher interest rates and market volatility constrained exits, according to Reuters.
- • Jon Gray, Blackstone's president and chief operating officer, reportedly said widening credit spreads on AI infrastructure debt could allow investors to secure more attractive yields on new projects, particularly those yet to secure tenants.
- • Blackstone's assets under management reached $1.37tn, and its credit and insurance division attracted nearly $36bn in new capital, while private equity inflows totaled $12.6bn.
- • Fee-related earnings rose 6% overall and 26% in private equity to $619m, and the firm beat Wall Street earnings expectations.
- • Blackstone shares were down nearly 30% year-to-date through Wednesday, versus a 13% gain in the broader US equity market, amid elevated redemption requests at its BCRED private credit vehicle.
Summary
Blackstone expects widening credit spreads on AI infrastructure debt to create opportunities for higher investment returns, even as its third-quarter realisations fell 34% amid weaker dealmaking, according to Reuters. President and chief operating officer Jon Gray reportedly said rising borrowing costs could allow investors to secure more attractive yields on new AI infrastructure projects, particularly assets that have yet to secure tenants.
The comments follow a selloff in AI-related debt triggered by concerns over CoreWeave, one of the sector's largest borrowers and a significant recipient of Blackstone financing. Investors have grown increasingly cautious about the sustainability of AI infrastructure spending and the leverage supporting its expansion.
Blackstone's net realisations fell 34% to approximately $332m in the third quarter, including a nearly 50% decline in its private equity business, as higher interest rates and market volatility constrained investment exits. Global M&A activity declined 41% quarter-on-quarter in the third quarter, according to LSEG, as higher borrowing costs and geopolitical volatility weighed on transactions. Blackstone executives reportedly said they expect a significant increase in net realisations in the fourth quarter, despite continued market uncertainty.
Despite the slowdown, the alternative asset manager exceeded Wall Street earnings expectations. Assets under management reached $1.37tn following strong investor inflows. Fee-related earnings increased 6%, while fee-related earnings from private equity rose 26% to $619m. The credit and insurance division attracted nearly $36bn in new capital, followed by $12.6bn in private equity inflows.
The firm has also faced elevated redemption requests at its flagship private credit vehicle, BCRED, although it maintains that the portfolio's underlying fundamentals remain healthy. Blackstone shares had fallen nearly 30% year-to-date through Wednesday, compared with a 13% gain in the broader US equity market.
The comments follow a selloff in AI-related debt triggered by concerns over CoreWeave, one of the sector's largest borrowers and a significant recipient of Blackstone financing. Investors have grown increasingly cautious about the sustainability of AI infrastructure spending and the leverage supporting its expansion.
Blackstone's net realisations fell 34% to approximately $332m in the third quarter, including a nearly 50% decline in its private equity business, as higher interest rates and market volatility constrained investment exits. Global M&A activity declined 41% quarter-on-quarter in the third quarter, according to LSEG, as higher borrowing costs and geopolitical volatility weighed on transactions. Blackstone executives reportedly said they expect a significant increase in net realisations in the fourth quarter, despite continued market uncertainty.
Despite the slowdown, the alternative asset manager exceeded Wall Street earnings expectations. Assets under management reached $1.37tn following strong investor inflows. Fee-related earnings increased 6%, while fee-related earnings from private equity rose 26% to $619m. The credit and insurance division attracted nearly $36bn in new capital, followed by $12.6bn in private equity inflows.
The firm has also faced elevated redemption requests at its flagship private credit vehicle, BCRED, although it maintains that the portfolio's underlying fundamentals remain healthy. Blackstone shares had fallen nearly 30% year-to-date through Wednesday, compared with a 13% gain in the broader US equity market.
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