Credit strategies led the way in terms of third quarter inflows totaling $15.1 billion at Blackstone, which gave shareholders its Q3 earnings update today.
Over the course of the quarter credit and insurance strategies saw inflows of $5.6 billion and over the course of the last 12 months have seen capital inflows of roughly $22 billion over the last year, officials said. The quarterly inflows bring the alternative investment giants’ total assets under management to $584 billion across credit, private equity, real estate and hedge funds.
“Blackstone reported excellent results in the third quarter, characterized by strong investment performance and earnings growth. We are also seeing positive forward momentum in both realizations and deployment,” Stephen A. Schwarzman, Blackstone chairman and CEO said, “We remain the partner of choice for limited partners globally, who face a challenging investment environment of historically low interest rates. As the pandemic continues to disrupt the global economy and society at large, our people remain unwavering in their dedication to serving our clients.”
Over the last 12 months, Blackstone has raised $88 billion across all its strategies.
Specifically within credit, which has been a popular strategy among institutional investors as of late looking for yield, Blackstone reported inflows in its fourth mezzanine/opportunistic fund ($1.7 billion), three CLOs ($1.1 billion), and global direct lending ($585 million). The firm reported net credit returns of 4% in composite returns, driven by strong portfolio performance as well as continue recovery in both public and private credit markets.
The top performing strategy for Blackstone with third quarter gains of 12.2% is private equity. Total assets under management in the space grew 9% to $189 billion with inflows of $3.9 billion in the quarter. The inflows included $2.3 billion for Blackstone Growth that launched during the quarter.
Back in May, Blackstone hired Vini Letteri for the global growth equity investing platform, Blackstone Growth (BXG). He joined Blackstone’s San Francisco office from KKR, where he was head of that firm’s growth equity platform NGT.
The firm also committed an additional $4.1 billion that was not yet deployed in the quarter, including the acquisition of Ancestry.com and Takeda Consumer Healthcare.
The only negative performance within private equity was reported in the firm’s secondaries platform, which had a drawdown of 13.2% over the quarter, which Blackstone said reflected a reporting lag of its underlying funds. The secondaries program saw inflows of only $150 million during the quarter.
On the real estate front, there were $3.9 billion in net inflows, while putting money to work in Hollywood studios. The biggest deal as of late for Blackstone’s real estate program was the recapitalization of BioMed Realty Trust for $14.6 billon earlier this month that generated a $6.5 billion of cumulative profits for the BREP VIII.
On the realization front over the third quarter was the IPO of India’s second REIT and investment in Mindspace Business Parks.
Hedge funds, meanwhile, have been holding steady with $77.8 billion in AUM, after briefly hitting above $80 billion at the beginning of 2020. Year-to-date returns through the September 30, according to the third quarter earnings presentation, were essentially slightly negative at -0.7% net.
According the HFR, funds of hedge funds have generally done better with gains of more than 4% in the third quarter and year-to-date gains were over 2%.
Blackstone reported strong market appreciation of $2.3 billion in the quarter within its fund of hedge fund unit. Officials added that there was continued fundraising strength in new products with higher effective management fees.