Blackstone Group President Hamilton James said Monday that new deals are tougher to find amid a tightening in the credit markets, and will impact near-term results.
The announcement came shortly after the private equity firm reported that its profit more than tripled in the second quarter as clients poured more money into its funds.
James said the company will focus on different opportunities rather than the "mega-deals" for which it has become known. James said on a conference call with analysts the company will look toward smaller buyout deals and look abroad for transactions. He added that Blackstone had a robust pipeline in Asia.
James also said its credit group is buying credit at discounted prices given the current market environment.
Earnings Take Off
Blackstone said second-quarter net income surged to $774.4 million from $224.1 million in the second quarter of 2006. The company reported a loss of 20 cents per share, but it only covered the last 12 days of the second quarter. Blackstone went public at the end of June.
Revenue climbed to $975.3 million from $324.6 million. Analysts polled by Thomson Financial forecast $1.06 billion in revenue and net income of $614.4 million.
Revenue in Blackstone's corporate private equity funds, which buy public companies using borrowed money and later sell them, more than tripled to $426.1 million. The division charges fees for managing clients' money. The funds charged fees on $23.5 billion in clients' assets during the quarter, compared with $20.5 billion in the second quarter of last year.
The real estate segment's revenue also more than tripled, to $320.2 million.
Revenue in the marketable alternative asset management division rose to $168.6 million. This business runs hedge funds, whose assets under management leaped to $32.7 billion from $18.7 billion in last year's second quarter.
The financial advisory segment, which advises companies on takeovers and other deals, reported an 18% increase in revenue to $98.6 million. The company cited heavy corporate takeover activity, which offset a slow quarter for advising on restructuring and reorganization.
Blackstone's stock has fallen sharply since the firm's initial public offering in June. Amid a global flight to safer investments, investors fear Blackstone will find it tougher to line up the financing to close takeover deals.