Skip to content

Blackstone becomes the first $1 trillion private equity manager

    For years, private equity firms have tried to join a special club: managing $1 trillion in assets, a milestone that would put them in the same league as mutual funds like BlackRock and Fidelity and banking giants like JPMorgan Chase.

    On Thursday, Blackstone became the first in the private equity industry to reach that level, boasting in its latest quarterly earnings that it managed just over $1 trillion in assets at the end of June.

    For companies like Blackstone, reaching that size confirms their position as a major player in mainstream finance. On Main Street, the company is perhaps best known for notable acquisitions of debt-fueled businesses, even though in reality it has long since branched out into a range of other businesses from loans to real estate.

    “This milestone reflects the extraordinary trust we have built with our investors,” Blackstone co-founder and CEO Stephen A. Schwarzman said in a statement, adding that he saw “a huge opportunity for further expansion.”

    Blackstone, which started in 1985 as a two-person shop overseeing $400,000, has since become a dominant force in the so-called alternative investment industry. It first gained prominence with leveraged buyouts, the kind of transactions made famous by “Barbarians at the Gate” and other chronicles of 1980s finance.

    These companies have since branched out into almost every corner of the financial world. In 1991, Blackstone started his real estate business, which has since become the country’s largest division and largest landlord. It has also moved into hedge funds, credit trading, infrastructure investing and more.

    That kind of growth helped transform Blackstone from being dependent on making deals for the majority of its fees to an asset collector that can charge management fees for supervised funds. Blackstone executives have also benefited greatly: Mr. Schwarzman took home $1.26 billion in pay and dividends last year.

    Expansion has also presented Blackstone with more challenges. The growing size of investment firms like Blackstone has raised questions in Washington about their ubiquity in the US economy, from housing to corporate lending to insurance and beyond.

    Mr. Schwarzman himself has at times attracted attention for his significant donations to Republican politicians, as well as his interactions with former President Donald J. Trump, a longtime acquaintance, during his administration. (Mr. Schwarzman has said he would not support Mr. Trump in the 2024 presidential campaign.) Jonathan D. Gray, Blackstone’s president and heir to the company’s heir apparent, is a major donor to Democratic candidates.

    Several of Blackstone’s companies have suffered economic headwinds recently, reflected in a nearly 40 percent drop last quarter in the company’s distributable earnings, a measure of the money that could be paid out to investors. The company’s private equity division has suffered from a lack of cheap financing as the Federal Reserve has raised interest rates. Concerns about the cost of debt and declining office occupancy rates also spurred investors to pull their money out of Blackstone’s flagship real estate fund, leading the company to limit withdrawals.