Dating apps, SPACs, and accounting shine as biggest alternatives managers release Q1 results
Dating apps, SPACs, and accounting shine as the big four release Q1 results
The biggest alternative asset fund managers had a record first quarter, with net income attributable to shareholders at the big four – Blackstone, KKR, Apollo, and Carlyle – reversed from a combined loss of $6.9bn in Q1 2020 to a gain of $7.4bn for Q1 2021. Performance was boosted by a strong fundraising market for managers with established relationships, healthy realizations (particularly from tech investments) and increased valuations of unrealized investments.
The world’s largest alternatives manager, Blackstone, led the way with net income before tax provisions of $3.4bn. Fee-related earnings were up 58% at $741mn over Q1 2020 (Fig. 1), distributable income rose by 114% to $1.2bn, and net accrued performance revenues came in at $5.2bn, a 138% increase. Assets under management (AUM) increased by 21% to $649bn at the end of Q1 2021. Blackstone will distribute $1bn of dividends for Q1, taking the return to shareholders through dividends and share repurchases over the past 12 months to $3.6bn.
Apollo Global Management had a very busy week. After recently announcing a merger with insurer Athene, it entered a $5bn deal to acquire web portal Yahoo! from communications firm Verizon. Apollo’s AUM increased to $461bn at the end of Q1 2021, which it attributed to increases in the mark-to-market valuations on its private equity portfolio and the closing of a number of flagship funds.
Private equity group KKR has seen its AUM rise 22% to $367bn. A third of this is now in perpetual capital, which saw a huge boost due to the acquisition of insurer Global Atlantic. KKR also announced a $15bn final close of its Asia IV fund, the largest private equity fund ever raised for the fast-growing region.
Carlyle Group saw a 20% year-on-year increase in AUM to $260bn. The group is paying out quarterly dividends of $0.25 per common share, in line with its quarterly dividends over 2020, although slightly lower, on average, than in 2019.
Private Equity and Real Estate Lead
A few asset classes stood out in company filings this quarter, not least private equity and real estate. Blackstone saw reported realizations of $8.1bn from its private equity portfolio in the first quarter. Successes included the IPO of dating app Bumble, which made CEO Whitney Wolfe Herd the world’s youngest female self-made billionaire and the youngest woman to take a company public, aged 31, and the $9bn merger of UK fintech Paysafe with a special purpose acquisition company (SPAC).
Blackstone made commitments to real estate of more than $6.2bn in Q1, including an investment in life science offices in the US. Of almost $18bn in deployed capital, real estate was the largest segment, with almost half of this going to core-plus strategies.
2021 Outlook
After a turbocharged start, private equity activity is expected to continue to accelerate through 2021. Professional services firm KPMG said record levels of dry powder and the industry catching up on deals delayed due to the COVID-19 pandemic would lead to a jump in deal completions, while “strong public market valuations and the IPO market” would drive exit activity. In real estate, KPMG expects digitization and the roll-out of 5G to have a huge impact on office, retail, and leisure spaces, while sustainability considerations will be forced further up the agenda.
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