Inflows beat forecasts by 41% and assets reached $1.37 trillion, but realized performance revenue fell 38% and distributable earnings slipped. Requests to leave BCRED hit 10% of assets, twice its quarterly limit.
Blackstone's third quarter showed a firm that can still raise money at scale but is finding it harder to return it.
Inflows totaled $63.3 billion, well above the $44.9 billion analysts expected, according to Visible Alpha. Credit and insurance accounted for $35.8 billion and private equity $12.6 billion. Assets under management rose 10% to $1.37 trillion. Dry powder, money raised but not yet invested, stood at $228.9 billion.
Exits were weaker. Realized performance revenue fell 38% to $464 million from $745 million a year earlier, and 49% in private equity. Net realizations dropped about 34% to roughly $332 million, Reuters reported. Blackstone deployed $30.1 billion in the quarter and realized $33.1 billion.
Distributable earnings fell 9% to $1.72 billion, or $1.32 a share, down 13% per share but above the $1.26 expected, according to LSEG. Fee-related earnings rose 6% to $1.57 billion, slightly short of the $1.59 billion forecast. President Jon Gray said volatility slowed initial public offerings and transactions.
The redemption queue
The pressure point is in Blackstone's private-wealth vehicles. Investors in BCRED, its private credit fund for individuals, asked to withdraw 10% of the fund's net asset value in the quarter, double the 5% limit. Blackstone, which first disclosed the level of requests in early September, paid about half. Net outflows were $1.4 billion, against gross sales of nearly $750 million.
Elsewhere in wealth the picture was better. Wealth assets reached $330 billion on nearly $9 billion of sales, BXPE, the private equity fund for individuals, posted record sales of $2.9 billion, and BREIT had its best regular-way net flows in four years.
The stock reversed
Shares fell as much as 2.2% before the open and hit a low of $105.50 after it. By 1:46 p.m. Eastern they had swung to $116.52, up 6.3%.
No single catalyst explains the reversal, but one forward-looking claim stood out: Blackstone said carried interest realizations already under contract for the fourth quarter will exceed its total net realizations for the third quarter. That points to a recovery in exits soon, rather than at some indefinite point.
Bulls and skeptics
The optimistic reading is that fundraising is intact, the exit drought is about to break, and BCRED's queue reflects a cooling in one wealth product rather than in private credit as an asset class.
The cautious reading is that slower realizations are weighing on earnings and the wealth channel, the firm's main growth engine, now has a visible liquidity constraint.
What to watch
Fourth-quarter realizations against the company's claim, and BCRED's next round of withdrawal requests. Blackstone pays a dividend of $1.12 a share on Nov. 9.