Blackstone’s profit falters as rising rates chill dealmaking

Blackstone’s third-quarter profit faltered as wild markets and rising borrowing costs chilled the pace of dealmaking at the world’s largest alternative-asset manager.

Distributable earnings in the quarter to September 30th fell 16 per cent to $1.37 billion (€1.39bn), Blackstone reported on Thursday. That measure of earnings available to shareholders amounted to $1.06 a share, beating analyst expectations of 99 US cent.

The results promise austere times for an industry that minted wealth and amassed reach across the economy during an era of low interest rates. Now, dealmakers are finding it harder to get cheap debt to grease returns or sell bets at profits. Banks are more cautious about providing buyout financing for fear they will lose money when they unload the loans to investors.

“In an environment like this, buyers, sellers and lenders pause, and deal volume slows until people find their footing,” Blackstone president Jon Gray said in an interview.

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Blackstone deployed less money in the quarter than a year ago. Dealmakers also generated less from cashing out bets in markets roiled by the US Federal Reserve’s push to curb inflation.

A rapid rise in interest rates and jittery markets ate into valuations. Blackstone’s net income fell by more than 99 per cent to $2.3 million, reflecting writedowns on investments. — Bloomberg