Peter Foley/Bloomberg NewsStephen Schwarzman, chief of the Blackstone Group.7:30 p.m. | Updated
In a year when the private equity industry took a political licking, the Blackstone Group is feeling the effects of a weak deal-making climate.
The firm, headed by Stephen A. Schwarzman, reported adjusted profit of $450 million for the fourth quarter of 2011 on Thursday, down 12 percent from the period a year earlier. Those results beat analyst expectations of $441.7 million in adjusted profit.
Blackstone reports its profit using a nonstandard metric called economic net income, which excludes charges related to the company’s 2007 initial public offering. On the basis of generally accepted accounting principles, the firm reported a loss of $123 million in the fourth quarter, compared with an $11 million loss a year earlier.
Blackstone’s total assets under management jumped 30 percent, to $166.2 billion, in 2011, and its annual adjusted profit fell slightly, to $1.39 billion, from $1.42 billion in 2010. On the basis of generally accepted accounting, the firm reported a loss of $269 million for the year.
“Despite volatile markets and struggling economies, Blackstone had strong performance in 2011,” Mr. Schwarzman said in a statement. “Our investors view us as a critical partner, helping them protect and grow their capital.”
Many private equity firms struggled in 2011, as a weak financial sector made buyouts harder to finance and execute, and lower performance fees hampered profitability. Blackstone’s private equity group felt particular pressure in 2011, recording $578.8 million in revenue for the year, 30 percent lower than in 2010.
With the deal-making slowdown, several of Blackstone’s lesser-known divisions have picked up some of the slack. The firm’s real estate group had full-year revenue of $1.6 billion, up 60 percent from the $1 billion it posted in 2010. But its hedge fund solutions, credit businesses and financial advisory businesses all reported revenue declines for the year.
Blackstone could make big deals in 2012. The firm’s funds had $32.9 billion in uninvested capital, known as dry powder, at the end of 2011. Roughly half of that capital is held by the firm’s private equity division.