Blackstone’s sees profit surge in Q3 as deal activity rebounds, inflows hit $54B

Blackstone reported a sharp rise in distributable earnings during its fiscal third quarter on Thursday, driven significantly by a resurgence in deal activity and continued strength in fundraising across its business lines.

The alternative asset manager’s distributable earnings – a closely watched measure of cash available to pay dividends – jumped 48% to $1.89 billion, or $1.52 per share, up from $1.28 billion, or $1.01 per share, a year earlier. The results surpassed analyst expectations, with FactSet’s consensus pegged at $1.21 per share.

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Assets under management grew 12% year over year to a record $1.24 trillion, with $54.2 billion in inflows during the quarter and $225.4 billion over the last twelve months. Blackstone’s dry powder – capital available for future investments – stood at $188.1 billion at quarter’s end.

Fee-related earnings, another key metric, climbed to $1.48 billion, or $1.20 per share, from $1.18 billion, or 96 cents per share, a year ago. Net income, however, fell to $624.9 million, or 80 cents per share, compared to $780.8 million, or $1.02 per share, in the prior-year period. Revenue for the quarter came in at $3.09 billion, a touch below analyst estimates.

While critics have been ringing alarms over a dealmaking slowdown in the private equity space, Blackstone saw a rebound within its own PE unit, with $27 billion invested and an additional $24 billion committed – marking the highest level in more than three years. Realizations, or investment exits, totaled $30.6 billion for the quarter, more than doubling earnings from private equity compared to the previous three months.

Blackstone President Jon Gray underscored the shift, commenting that “the deal dam is finally breaking.” The cost and availability of capital, he noted, are now allowing transactions to move more quickly.

Private credit remained a major growth engine for Blackstone, with assets in its credit and insurance business reaching $432.3 billion, up 22% from a year ago. The unit accounted for nearly two-thirds of the quarter’s $54.2 billion in inflows, reflecting strong demand for private credit and higher-grade debt strategies.

Recent turmoil in the credit markets – centered on the collapse of subprime auto lender Tricolor Holdings and the bankruptcy of auto-parts supplier First Brands Group – has raised questions about systemic risk in private credit. Some bank executives have suggested these events could signal broader problems, with JPMorgan CEO Jamie Dimon warning that "when you see one cockroach, there are probably more."

Read more: Is First Brands implosion a new subprime crisis?

Gray pushed back on this narrative, arguing that the issues are not widespread. “Tying a few troubled financings led by banks to providers of private credit seems like a stretch,” he said. “We don’t really understand that connection. They all feel pretty idiosyncratic.”

Gilles Dellaert, who leads Blackstone’s combined credit and insurance platform, noted that the private credit industry is evolving, with more capital flowing into higher-quality, investment-grade strategies. He cautioned, however, that “at a time when underwriting standards and documents are looser, the recovery rates will probably be worse than some people expect.”

Dellaert also stressed that performance dispersion is increasing among funds, particularly those that ventured into riskier segments of the market.

Blackstone’s infrastructure investments delivered the highest returns among its strategies, with a 5.2% gain for the quarter. The firm has made significant bets on data centers, energy, and grid infrastructure, which Gray characterized as the “picks and shovels” of the artificial intelligence boom.

Despite the strong quarter, Blackstone shares have declined 6% so far this year, underperforming the S&P 500. The firm declared a quarterly dividend of $1.29 per share, payable November 10 to shareholders of record as of November 3.