Blackstone Shares Jump Most in Three Months on Expansion

Blackstone Group LP, the world’s biggest private-equity firm by assets, rose the most in three months as executives highlighted plans for expansion and said fees for managing client money are rising.

Blackstone gained 4.7 percent, the biggest increase since Jan. 31, after Jonathan Gray, global head of real estate, said today at the firm’s third annual investor day that he expects to hold a first close on its $4 billion fund dedicated to Asia real estate this quarter. Chief Financial Officer Laurence Tosi said performance fees are approaching the levels of realized performance fees that it earned before the U.S. financial crisis.

“It’s like watching a great basketball team: the ball’s getting passed around and people are putting in easy shots,” Chief Executive Officer Stephen Schwarzman said at the event, held at the Blackstone-owned Waldorf Astoria hotel in New York. “It’s like rushing across a front with tanks.”

Schwarzman, who co-founded Blackstone in 1985, said the firm raised $96 billion over the past two years and is now more than twice as big as it was at the time of its 2007 initial public offering. Blackstone shares are still trading 30 percent below the $31 at which it first sold shares to the public.

Schwarzman said he was most excited about the firm’s tactical opportunities initiative, run by private-equity veteran David Blitzer. The business, which raises money from large clients and customizes an investment strategy that could include any of Blackstone’s segments, has raised $5 billion, said Joseph Baratta, global head of private equity.

Retail Opportunity

The firm is also focused on gathering more money from individual investors, an opportunity that President Tony James said today was the biggest path to higher assets under management. Blackstone oversaw $218.2 billion as of March 31.

Blackstone’s hedge funds-of-funds business, known as BAAM, is seeking to take advantage of the dwindling number of so-called defined-benefit plans, in which employers provide retirement savings to employees. Tom Hill, BAAM’s CEO, called it a “massive opportunity” to step in and create relationships with advisers who can manage and invest portions of worker savings.

Some Blackstone executives have said they expect low growth to continue in the U.S. and Europe. James said last month that “growth in the U.S. economy is anemic” and “Europe is flat to down.” Today, the firm’s executives repeatedly told investors that they collaborate daily to share information that each is learning from their portfolios.

Blackstone, which closed at $21.75 in New York, has surged 40 percent this year.

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