After a 27% plunge in value since its IPO in June, Blackstone Group
In Q2, Blackstone's revenues tripled to $975.3 million and net income more than tripled to $774.4 million. The main sources of income came from management and incentive fees, which amounted to $795.4 million in the quarter.
Of course, over the past couple of months, there's been a chill in the private equity marketplace, as credit has tightened. Major financial institutions like JPMorgan
On the earnings call, Blackstone's chief operating officer, Tony James, agreed that the environment has suddenly become challenging. The upshot is that we will probably see only a trickle of mega deals.
Then again, James thinks this is a good thing. After all, in a tough market, the premier firms like Blackstone should have less competition on transactions and still have access to financing. He mentioned that his firm showed much restraint this year, as pricing on buyouts reached frothy levels.
Some of the opportunities include buying debt at discounted prices and also doing deals in Europe and in Asia. Keep in mind that Blackstone CEO Stephen Schwarzman, is in China (the government invested $3 billion in the firm prior to the IPO).
But with $88.4 billion under management, Blackstone needs mega deals to move the needle. And, with more expensive debt financing, it gets difficult for the firm to leverage its companies to pay itself large dividends, which juices returns.
There may also be nasty surprises, such as the possible unwinding of high-profile deals like TXU
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