Blackstone Inc (BX)

[eastunder]

Blackstone First-Quarter Profit Rises on Fund Performance

By Devin Banerjee - Apr 18, 2013 6:13 AM MT.

http://www.bloomberg.com/news/2013-04-18/blackstone-first-quarter-profit-rises-on-fund-performance.html?cmpid=yhoo

Blackstone Group LP (BX), the world’s biggest buyout firm, said first-quarter profit rose 28 percent as market gains lifted the carrying value of its holdings.

Economic net income, a measure of earnings excluding some costs tied to the firm’s 2007 initial public offering, increased to $628.3 million, or 55 cents a share, from $491.2 million, or 44 cents, a year earlier, New York-based Blackstone said today in a statement. Analysts had expected earnings of 53 cents a share, according to the average of 15 estimates in a Bloomberg survey.

Blackstone’s holdings benefited from a 10 percent increase in the Standard & Poor’s 500 index of large U.S. companies and a 6 percent gain in the MSCI All-Country World Index during the first three months of the year. The company, under Chief Executive Officer Stephen Schwarzman, has led a push among the largest so-called alternative-asset firms to expand their businesses beyond traditional leveraged buyouts.

“Blackstone was more active on the realization front than we previously anticipated,” Howard Chen, an analyst at Credit Suisse Group AG in New York, said in a research note before the earnings were released. The company has been successful in “broadening its business,” Chen wrote.

Blackstone completed at least six follow-on deals, selling shares in companies it owns as markets rose, as well as a $580 million IPO of portfolio company Pinnacle Foods Inc. (PF) during the quarter. The firm is preparing to take public SeaWorld Entertainment Inc. (SEAS), which it bought as part of a $2.7 billion deal in 2009, in an IPO this week that could raise as much as $540 million.

Buyout Bellwether

Blackstone’s economic net income, or ENI, differs from U.S. generally accepted accounting principles. Under those standards, known as GAAP, Blackstone had net income of $167.6 million, or 29 cents per share, compared with $58.3 million, or 11 cents, a year earlier.

Blackstone is seen as a bellwether for the buyout industry given its size and reach across markets. KKR & Co. (KKR), the New York-based firm run by cousins Henry Kravis and George Roberts, is set to report results next week. Carlyle Group LP (CG), the Washington-based firm that manages 113 funds and 67 funds-of- funds, is scheduled to report next month.

Deals Double

Private-equity firms pool money from investors including pension plans and endowments with a mandate to buy companies within about five to six years, overhaul then sell them, and return the funds with a profit after about 10 years. The firms, which use debt to finance the deals and amplify returns, typically charge an annual management fee equal to 1.5 percent to 2 percent of committed funds and keep 20 percent of profit from investments.

Worldwide, the value of private-equity deals announced in the first quarter rose 16 percent to $114 billion from a year earlier, with leveraged buyouts more than doubling to $55 billion, according to data compiled by Bloomberg.

Blackstone on March 22 proposed to buy computer maker Dell Inc. (DELL) and take the company private, rivaling a $24.4 billion offer by Michael Dell and Silver Lake Management LLC, the largest proposed LBO since the U.S. financial crisis. Blackstone and CEO Dell have held discussions almost daily regarding the founder’s potential participation in a Blackstone-led buyout, according to people familiar with the matter.

Blackstone reported results before the start of regular U.S. trading. The shares advanced 31 percent this year through yesterday, compared with the 14 percent gain in the Standard & Poor’s 20-company index of money managers and custody banks.