For years, private equity firms have sought to join the special club of $1 trillion in assets under management, but this is not the case with mutual fund giants like BlackRock and Fidelity, as well as JPMorgan Chase. It will be a milestone on par with any big bank.
On Thursday, Blackstone became the first in the private equity industry to hit that mark, boasting its latest quarterly earnings report under its control. Over $1 Trillion in Assets As of the end of June.
For a company like Blackstone, achieving that scale cements its position as a major player in mainstream finance. On Main Street, the company is perhaps best known for its debt-driven buyouts, even though it’s actually long since branched out into businesses ranging from lending to real estate.
“This milestone reflects the extraordinary trust we have built with our investors,” Blackstone co-founder and CEO Steven A. Schwartzman said in a statement. He added that he sees a big opportunity for
Blackstone started in 1985 as a two-man shop managing $400,000 and has since become a dominant force in the so-called alternative investment industry. The deal first came to prominence with the leveraged buyout, a deal made famous in “Barbarian at the Gate” and other of his 1980s financial history.
Since then, these companies have expanded into nearly every sector of the financial industry. Blackstone began his real estate business in 1991 and has since become the company’s largest division and the nation’s largest landowner. It has also expanded into hedge funds, margin trading, and infrastructure investment.
Such growth has transformed Blackstone from relying on closing deals for most of its fees to becoming an asset aggregator that can charge management fees to the funds it oversees.Blackstone executives also benefited greatly: Mr. Schwartzman took home $1.26 billion in salaries and dividends last year.
The expansion has exposed Blackstone to even more challenges. The growing size of investment firms like Blackstone has prompted Washington to question their ubiquity across the American economy, from housing to business lending to insurance and more. there is
Schwartzman himself has sometimes come under scrutiny for his large donations to Republican politicians and his interactions with longtime acquaintances during his administration, former President Donald J. Trump. (Schwartzman says: won’t support trump Blackstone’s president and likely successor, Jonathan D. Gray, is a big donor to Democratic candidates.
Several of Blackstone’s businesses have recently been hit by economic headwinds that saw the company’s distributable earnings, a measure of how much it could be paid out to investors, drop nearly 40% last quarter. reflected in the The company’s private equity arm has been hit by a lack of cheap funding as the Federal Reserve hiked interest rates. Concerns about plummeting debt costs and office occupancy rates have also spurred investors to withdraw from Blackstone’s flagship real estate fund, leading the company to limit withdrawals.