Monday, November 12, 2007

Flotation costs knock Blackstone

Flotation costs knock Blackstone
Blackstone logo
Blackstone said conditions were trickier for private equity buyouts
Private equity firm Blackstone has reported a third-quarter loss, hit by flotation costs and lower income from property following sub-prime problems.

Blackstone reported a loss of $113.2m (£54.8m) compared with net income of $372.5m in the same period a year ago.

The loss stemmed partly from $802.6m worth of charges after the firm listed its shares in June this year.

The housing slowdown contributed to a broader squeeze in the commercial property sector, said the firm.

Revenue from its real estate business fell to $109.1m from $196.1m for the quarter, said Blackstone.

However, overall revenue climbed to $526.7m from $461.5m a year earlier.

Tougher climate

In the wake of the credit crisis, financing deals had become harder, Blackstone said, and that had led to a "dampening effect" for new private equity buyouts.

"It will be difficult to structure very large leveraged transactions in corporate private equity and real estate until the credit markets improve," said Stephen Schwarzman, chairman and chief executive of Blackstone.

But he added that "pricing of assets is more favourable".

The firm saw revenue from its asset management business - which includes hedge fund investments - rise by 88% to $124.9m.

Blackstone shares fell more than $2 to $22.26 on the news.

1 comment:

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