Friday, 25 July 2014
Last updated 4 min ago
Mar 11 2008 | 10:42am ET
The credit crisis has left a parched lending market in its wake. That, in turn, has left private equity giant The Blackstone Group feeling parched.
Blackstone said its fourth-quarter profits evaporated, plummeting from $808.1 million a year ago to just $88 million, an 89% drop. The firm’s performance fell far short of analysts’ already-dismal estimates, with a profit of $0.08 per share, compared to an expected $0.20. It also posted a net loss of $170 million due to initial public offering-related vesting expenses.
Unable to find financing as banks and other lenders have grown skittish in the wake of the subprime mortgage market collapse and credit crisis, Blackstone hasn’t closed a deal of more than $2 billion in five months. The firm invested just $2.33 billion last quarter, a 31% decline from the fourth quarter of 2006.
“Credit market problems persist and if anything have gotten worse,” Tony James, president of the firm, said on a conference call. Chairman Stephen Schwartzman added, “We are in the midst of a severe financial crisis.”
The firm is looking into doing some smaller transactions to fill the gap, James said, warning that “There’s no evidence [the credit market has] bottomed out yet.”
But the news wasn’t all gloomy for Blackstone: Its assets under management soared 47% to $102.4 billion and it also posted a 17% jump in revenue to $3.05 billion, in spite of a decline in fees earned by completing acquisitions.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…