“We had a slow investment rate for the quarter,” said Schwarzman. “We missed one or two large situations where we would have ended up putting $1 billion or more into a transaction.”
Blackstone realized $319 million in performance fees by exiting investments during the quarter, compared with $19 million a year earlier. Including unrealized gains, performance fees rose 57% to $604 million, helped by gains of 47% in Blackstone’s private-equity business, 49% in the real estate unit, 161% in its hedge funds-of-funds segment and 50% in the credit business, known as GSO.
Blackstone is seen as a bellwether for the buyout industry given its size and reach across markets. KKR & Co., the New York-based firm run by cousins Henry Kravis and George Roberts, is set to report results next week. Carlyle Group LP, the Washington-based firm that manages 113 funds and 67 funds-of- funds, is scheduled to report next month.
Blackstone’s assets under management rose 3.8% from the end of 2012 to $218.2 billion, a record among private-equity and alternative-asset managers. The firm has $36 billion in unspent capital commitments, known as dry powder.
Fund holdings benefited from a 10% increase in the S&P 500 and a 6% gain in the MSCI All-Country World Index during the first three months of the year.
Blackstone’s private-equity portfolio rose 7.9% during the quarter, driven primarily by holdings in its $21 billion Blackstone Capital Partners V pool, raised before the U.S. financial crisis. The fund has a 4% net internal rate of return and is valued at 1.3 times its invested capital, Blackstone said.
Worldwide, the value of private-equity deals announced in the first quarter rose 16% to $114 billion from a year earlier, with leveraged buyouts more than doubling to $55 billion, according to data compiled by Bloomberg.
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% to 2% of committed funds and keep 20% of profit from investments.
Blackstone said it will pay a dividend of 30 cents per common unit on May 6.