Insider Today: Blackstone hits $1 trillion

Welcome to the four-comma club, Blackstone.

The firm has reached rarified air, as it now manages more than $1 trillion in assets. 

The achievement, announced in its second-quarter earnings report, is impressive in and of itself. But Blackstone has the added bonus of being the first private-equity firm to reach the milestone.

While giant asset managers like BlackRock and Vanguard surpassed the mark long ago, their approach to amassing assets relies heavily on building massive ETF businesses and courting 401(k) plans. As an alternative investment firm, Blackstone’s path to $1 trillion has been, well, alternative.

With a mix of real estate, private credit, wealth, and growth investments, the firm has done a little bit of everything to get to $1 trillion.

Sure, Blackstone benefited from a low-rate environment over the years that made the firm’s offerings more attractive to investors looking for higher returns.

But that all flipped when rates spiked over the past year, complicating many of Blackstone’s strategies.

Real estate, in particular, faced challenges as investors started pulling money in waves from one of its funds. And things don’t appear to be getting easier, as a recent Wells Fargo note predicted more pain for both residential and commercial sectors. 

But Blackstone’s chief financial officer, Michael Chae, was quick to point out on the earnings call that half of the firm’s owned real estate was in logistics, student housing, and data centers, areas he said were performing well.

Besides, nothing could dampen Stephen Schwarzman’s mood. Blackstone’s chairman, CEO, and cofounder was happy to reminisce about how far the firm has come since launching in 1985 with $400,000 in startup capital.

The billionaire called the $1 trillion achievement “significant in many ways, including for me personally,” and added that he felt “an immense sense of pride” in where the firm had come, according to a transcript of the call provided by AlphaSense.

Schwarzman, who is 76, has the added benefit of having a clear succession plan in place. Unlike some of his Wall Street peers, Jon Gray, the firm’s president and COO, is waiting in the wings.

In fact, perhaps things have gotten too good at Blackstone for Schwarzman.

He highlighted how competitive the firm had been at recruiting, noting this year’s selection rate for its 169 first-year analyst positions was less than 0.3%.

“I doubt I'd be able to be hired today,” he said, before adding, “not sure that's a great thing.”

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