Blackstone Swings to Profit of $622 Million in 3rd Quarter

If the Blackstone Group‘s third-quarter results can serve as a reasonable proxy for the private equity industry, then its brethren will have a lot of good news to share with investors.

Blackstone swung to a $621.8 million gain for the quarter from a loss in the period a year earlier, as the firm benefited from a sharp increase in the value of its holdings. And its assets under management swelled to over $205 billion, setting a record for the 27-year-old investment house.

That profit amounted to 55 cents a stock unit, surpassing the average analyst estimate of 41 cents, according to Standard & Poor's Capital IQ.

Like many private equity firms, Blackstone reports its profit as economic net income, which factors in gains from unrealized investments.

“In the third quarter, Blackstone continued doing what we've been doing for 27 years â€" generating compelling returns for our limited partner investors across our diversified platform,” Stephen A. S chwarzman, the firm's chairman and chief executive, said in a statement. “Our investors clearly trust Blackstone to manage their capital and provide solutions to their unique needs, and we've continued to capture market share as a result.”

All of Blackstone's investment businesses benefited from stronger performance fees. Both the private equity and real estate divisions swung to positive revenue results, while the firm's hedge fund unit more than doubled revenue. Its credit unit posted a fifteen-fold gain in revenue.

Only the deal advisory unit, the firm's oldest division, posted a drop in revenue, as deal closings were delayed.

While executives appeared over the moon with the results, at least one was considerably less pleased with the firm's most recent legal battle. Blackstone is one of several private equity shops that is accused of colluding with rivals to essentially reduce competition for potential takeovers.

Hamilton James, Blackstone's p resident, dismissed such claims as “a complete fabrication and a bunch of malarky” on a call with reporters, according to media reports.