Blackstone’s losses widen
US-BASED private equity giant Blackstone yesterday posted a wider second quarter loss than in the same period last year but still managed to top Wall Street’s expectations.
Blackstone’s loss widened to $164.3m (£98m) from $156.5m, but it added that it was sitting on its biggest cash pile ever.
The credit crunch and lack of financing have meant private equity firms have struggled to spend money on leveraged buyouts over the past year and have large amounts of cash, known as “dry powder”, to invest.
“We now have $29bn in dry powder, the largest amount of available capital in the firm’s history, and it couldn’t come at a better time,” said chief operating officer Tony James, adding that times of market turmoil are when Blackstone can find its most profitable investments.
James said that Blackstone is getting close to some “very interesting deals” that should be announced in the second half of the year, but did not specify the industries.
“Some of the companies we are looking at include distressed assets which have significant debt in place,” added Blackstone’s chief executive officer Stephen Schwarzman.
Sources have indicated that the firm, along with TPG Capital and Carlyle, has been in talks to buy Bank of America’s First Republic.
Blackstone’s second-quarter earnings before income taxes, non-cash charges for vesting equity-based compensation, and amortisation of intangible assets were $173m, up from $100m a year earlier, including at investment loss of $11m.