NEW YORK (Reuters) - Blackstone Group LP (BX.N), the world’s biggest alternative asset manager, posted stronger-than-expected earnings on Thursday as gains in property holdings and rebounding oil prices offset losses from Britain’s shock decision to leave the European Union.
New York-based Blackstone, whose shares rose nearly 4 percent, is the first large private equity firm to report results for the second quarter. Its strong showing may mark a turn for the sector, which has smarted from falling oil prices in the past year.
Blackstone said economic net income, a key metric for U.S. private equity firms that accounts for unrealized gains or losses in investments, rose 2 percent to $519.8 million, or 44 cents per share, from a year earlier.
Analysts on average had expected a 9 percent decline to 39 cents per share from 43 cents, according to Thomson Reuters I/B/E/S.
The gains came despite a modest drag on investments after Britain stunned the world on June 23 by voting to leave the European Union, a move popularly known as Brexit.
“Brexit had a brief but sizable impact on currencies and equity markets right at the end of the quarter,” said Chief Operating Officer Tony James.
Blackstone said it had declines in its investments in London offices, and a weakening sterling GBP= had also dented the value of some of its UK holdings.
Despite the economic income growth, Blackstone’s distributable earnings, which are available to pay dividends, fell 52 percent to 42 cents per common unit from 88 cents. Blackstone declared a second-quarter dividend of 36 cents per unit.
Blackstone’s real estate arm outshone the other divisions. Its economic income jumped 53 percent to $209.2 million, bolstered in part by sales of two commercial properties.
The credit division, which took a beating from tumbling oil prices in the past year, recovered with a 7 percent rise in economic income due to “a significant rebound in energy investments,” Blackstone said.
Still, Blackstone’s financial report showed funds it had raised for energy investments remained largely untouched, reflecting the rebound in oil prices CLc1 that had made it harder for investors to buy desirable assets at deep discounts.
James said the energy sector remained attractive to Blackstone, although the buyout group was pricing deals with the expectation that oil prices could retreat to $30 again from about $45 currently.
During the quarter, investors once again handed more cash to Blackstone to manage, with its assets under management increasing 7 percent to a record $356.3 billion.
Reporting by Koh Gui Qing in New York; Editing by Lisa Von Ahn