Blackstone Inc has 375.5 billion USDs invested in Credit & Insurance out of its 1.127 trillion USDs of assets under management.
Private credit is a hot sector in alternative investments. Blackstone does both direct lending and securitized lending via CLOs. In 2024 Blackstone raised 91.2 billion USDs for its Credit & Insurance business.
Due to its market share and share in technology related private credit lending and securitized credit, Blacktone stands to unlock huge value in the future, according to Wolfteam Ltd.'s projections and estimates.
Here are highlights of Blackstone's Credit & Insurance business from Blackstone's fourth quarter, full calendar year 2024 earnings:
Total AUM: Increased 20% to $375.5 billion with inflows of $34.2 billion in the quarter and $91.2 billion for the year.
– Inflows in the quarter included $14.5 billion for the global direct lending strategy, inclusive of $3.1 billion of
equity raised for BCRED, and $9.9 billion for infrastructure and asset based credit strategies.
– The fifth opportunistic private credit strategy had $1.2 billion of inflows in the quarter, bringing total investable
capital to $4.2 billion.
– Closed 5 new U.S. CLOs for $2.5 billion.
▪ Capital Deployed: $21.6 billion in the quarter and $63.8 billion for the year driven by U.S. direct lending as well as
infrastructure and asset based credit strategies.
– Committed an additional $7.2 billion that was not yet deployed in the quarter.
▪ Realizations: $8.7 billion in the quarter and $33.3 billion for the year.
▪ Returns: Private Credit gross return of 3.1% (2.2% net) and Liquid Credit gross return of 2.4% (2.3% net) in the
quarter.
– Private Credit gross return of 15.7% (11.6% net) and Liquid Credit gross return of 9.5% (9.0% net) for the year.
($ in thousands) 4Q'23 4Q'24 vs. 4Q'23 FY'23 FY'24 vs. FY'23
Management Fees, Net 339,829$ 403,743$ 19% 1,338,041$ 1,581,807$ 18%
Fee Related Performance Revenues 154,642 227,986 47% 564,287 747,092 32%
Fee Related Compensation (156,819) (222,962) 42% (628,064) (755,620) 20%
Other Operating Expenses (94,538) (100,674) 6% (323,773) (371,354) 15%
Fee Related Earnings 243,114$ 308,093$ 27% 950,491$ 1,201,925$ 26%
Realized Performance Revenues 135,746 163,799 21% 317,620 313,092 (1)%
Realized Performance Compensation (60,694) (70,266) 16% (140,210) (129,814) (7)%
Realized Principal Investment Income 5,999 8,544 42% 21,752 39,855 83%
Net Realizations 81,051 102,077 26% 199,162 223,133 12%
Segment Distributable Earnings 324,165$ 410,170$ 27% 1,149,653$ 1,425,058$ 24%
Segment Revenues 636,216$ 804,072$ 26% 2,241,700$ 2,681,846$ 20%
Total AUM 312,674,037$ 375,507,818$ 20% 312,674,037$ 375,507,818$ 20%
Fee-Earning AUM 218,188,936$ 264,617,560$ 21% 218,188,936$ 264,617,560$ 21%
Private credit relates to giving loans to business at 9 % + interest, usually to the tune of 9 % -12 % interest on disburse loans. It is natural that such businesses do not have access to bank funding, because they are either in distress or in difficult position. Large alternative asset management companies like Blackstone, KKR, Apollo, Carlyle, Ares, Blu Owl etc, have stepped in and filled this void left by banks.
Actually, private credit turns out to be a hugely profitable business and has minted several billionaires on Wall Street for the past 10 - 12 years since deregulation opened up this niche to alternative asset management operators.
Private credit related publicly listed vehicles of Blackstone, Blue Owl yield 9 % to 12 % dividends, which proves how lucrative the private credit business is.
Much of Blackstone's private credit is in the forms of leveraged loans, direct lending and securitized lending in the form of Collaterilized Debt Obligations, CLOs is given out to mid-sized technology firms. Since the technology sector has lived through exuberant growth in the last last 15 years, private credit to technology firms has proven a hugely profitable niche.
All in all, Blackstone stands further to benefit from the private credit boom that is developing all over the world.
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