Blackstone Swings to a Loss
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Blackstone Swings to a Loss
Blackstone Swings to a Loss On Charges Related to IPO
By KATHY SHWIFF
November 12, 2007 9:23 a.m.
Private-equity firm Blackstone Group swung to a loss in its second quarter as a public company on charges related to its public stock offering.
Revenue in its real estate segment dropped, and Blackstone said, "The lack of liquidity in the financing markets has had a dampening effect on initiating new, large-sized corporate private equity transactions."
Shares fell in premarket trading, falling to $22.71 from Friday's closing price of $24.28
The New York firm reported a third-quarter net loss of $113.2 million, compared with net income of $372.5 million a year earlier. Per-unit figures weren't provided. Revenue rose 14% to $526.7 million from $461.5 million.
Results included $802.6 million of non-cash charges associated with the vesting of equity-based compensation arising from its IPO, as well as acquisition-related charges.
The mean estimates of analysts surveyed by Thomson Financial were for earnings of 30 cents a unit on revenue of $765 million.
Chief Executive and co-founder Stephen A. Schwarzman said, "This environment provides us with both challenges and opportunities. While it will be difficult to structure very large leveraged transactions in corporate private equity and real estate until the credit markets improve, pricing of assets is more favorable. Additionally, Blackstone's marketable alternatives and advisory businesses continue to grow and are not dependent on access to the lending markets."
Revenue in the corporate private-equity segment jumped 42% to $227.3 million on higher fees. Real estate revenue fell 44% to $109.1 million on lower fees and declines in investment income.
Revenue in the alternative asset-management segment, built on hedge funds, surged 88% to $124.9 million with more fee-earning assets under management. Financial advisory revenue went up 60% to $84.3 million.
Blackstone could be hurt by legislation before Congress that would require publicly traded private equity firms to be taxed as corporations. Blackstone went public as a partnership, partly to avoid paying the 35% rate for corporations.
Blackstone's units have fallen 36% since reaching a high of $38 on their first day of trading June 22. The offering raised $4.13 billion, making it the sixth-richest IPO in U.S. history.
Write to Kathy Shwiff at kathy.shwiff@dowjones.com
By KATHY SHWIFF
November 12, 2007 9:23 a.m.
Private-equity firm Blackstone Group swung to a loss in its second quarter as a public company on charges related to its public stock offering.
Revenue in its real estate segment dropped, and Blackstone said, "The lack of liquidity in the financing markets has had a dampening effect on initiating new, large-sized corporate private equity transactions."
Shares fell in premarket trading, falling to $22.71 from Friday's closing price of $24.28
The New York firm reported a third-quarter net loss of $113.2 million, compared with net income of $372.5 million a year earlier. Per-unit figures weren't provided. Revenue rose 14% to $526.7 million from $461.5 million.
Results included $802.6 million of non-cash charges associated with the vesting of equity-based compensation arising from its IPO, as well as acquisition-related charges.
The mean estimates of analysts surveyed by Thomson Financial were for earnings of 30 cents a unit on revenue of $765 million.
Chief Executive and co-founder Stephen A. Schwarzman said, "This environment provides us with both challenges and opportunities. While it will be difficult to structure very large leveraged transactions in corporate private equity and real estate until the credit markets improve, pricing of assets is more favorable. Additionally, Blackstone's marketable alternatives and advisory businesses continue to grow and are not dependent on access to the lending markets."
Revenue in the corporate private-equity segment jumped 42% to $227.3 million on higher fees. Real estate revenue fell 44% to $109.1 million on lower fees and declines in investment income.
Revenue in the alternative asset-management segment, built on hedge funds, surged 88% to $124.9 million with more fee-earning assets under management. Financial advisory revenue went up 60% to $84.3 million.
Blackstone could be hurt by legislation before Congress that would require publicly traded private equity firms to be taxed as corporations. Blackstone went public as a partnership, partly to avoid paying the 35% rate for corporations.
Blackstone's units have fallen 36% since reaching a high of $38 on their first day of trading June 22. The offering raised $4.13 billion, making it the sixth-richest IPO in U.S. history.
Write to Kathy Shwiff at kathy.shwiff@dowjones.com
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