Blackstone Q3 Hedge Fund Revenues Down 60% From 2010

Oct 20 2011 | 1:12pm ET

Blackstone’s Hedge Fund Solutions arm saw it revenues plummet 60% year on year in Q3 2011, to $57.2 million from $94.6 million a year earlier.

The firm attributed the decline in revenues to decreases in performance fees and investment income of $29.1 million and $17.9 million, respectively. This was partly offset by a 14% increase in total management fees which hit $79.8 million in the third quarter of 2011.

For the nine months ending in September 2011, Hedge Fund Solutions had revenues of $247.2 million, almost identical to the $247.6 million registered in the same period of 2010.

Returns for the underlying assets for Blackstone’s Hedge Fund Solutions’ funds were negative 4.1% for the third quarter of 2011, a result the firm attributes to the return of turbulent markets.

ENI for the Hedge Funds Solutions segment decreased by 67% to $16.5 million in Q3 2011, compared to $49.4 million for Q3 2010, driven principally by the decreases in performance fees and investment income.

Fee-earning assets under management for the segment grew 17% to $37.2 billion from $31.8 billion at the end of the third quarter of 2010. Blackstone attributes the increase to net inflows across the segment.

Net inflows for Blackstone’s Hedge Fund Solutions business came primarily from its commingled and customized investment products, hedge fund manager seeding platform and long-only solutions business.

Hedge Fund Solutions had $2.4 billion of net inflows of fee-earning assets under management for the third quarter of 2011, bringing year to date net fee-earning inflows to $6.1 billion.


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