Blackstone Shows Muted 2008 For Private Equity (BX)

The Blackstone Group, LP (NYSE: BX) has posted earnings of $0.08 EPS before charges, while First Call had $0.19 as consensus.  The private equity giant also posted revenues of $447.5 million, compared to consensus estimates of $434.6 million.  After charges and after items, the company lost $170 million in the quarter.

Blackstone decided it would also initiate a strong dividend and it declared a quarterly distribution of $0.30 per common unit and reaffirms priority distributions to public common holders of $1.20 per year through 2009.

Blackstone has noted a backlog in the second half of 2007 along with poor fixed income securities performance and increased credit losses have all materially hindered lenders’ willingness to fund new, large-sized acquisitions.  We have already noted this for some time as the giant club deals are dead.

Further, Blackstone noted that the volume of new private equity acquisitions has materially declined and new private equity buyouts have been smaller in size, less leveraged, and under less favorable terms for the debt provided. Almost all of the terms are lower in the current environment, the transaction fees are lower, the number of deals is lower, and the rate of appreciation is lower.  Market conditions in the U.S. and Europe are expected to remain lower in 2008 and visibility is light.

Despite the current environment, Blackstone noted that it has made eight new private equity commitments since the credit crunch for some $2.7 billion of equity.  It also expects to see continue to new investment opportunities globally, particularly in Asia, and it will remain disciplined and opportunistic.

The stock is indicated down marginally at the open.

Jon C. Ogg
March 10, 2008