Blackstone Inc. · NYSE:BX
Blackstone — Citi Global Financial Conference 2013
26 slides from Blackstone's conference presentation, Nov 19, 2013
Slide 1: Global Financial Conference 2013
Publishing – Please change this F T Please add the shadow R A out for the black cover. Also effects / D 3-d bar graphs throughout Global Financial Conference 2013 Joan Solotar Head of External Relations & Strategy November 19, 2013 All data as of 9/30/13 unless otherwise indicated.
Slide 2: World's leading alternatives firm with over $248 billion of AUM
Global Financial Conference 2013 Blackstone is the world’s leading alternatives firm, with over $248 billion of AUM Real Estate Private Equity $69 billion AUM $50 billion AUM(1) Strategic Partners Tactical Opportunities (Secondaries Business) (Flexible Mandate) $9 billion AUM $4 billion AUM Hedge Fu
Slide 3: A truly global, institutionalized firm that still operates as a closely knit partnership
Global Financial Conference 2013 A truly global, institutionalized firm that still operates as a closely knit partnership Consistency of talent and culture No star investors – rigorous, institutionalized investment process Powerful brand Global leading platforms in all major businesses Str
Slide 4: Seamless sharing of intellectual capital makes our businesses better
Global Financial Conference 2013 The seamless sharing of intellectual capital makes our businesses better Strategic Private LP investor trends Partners Equity Market insights Invest together in several transactions Real Credit Estate (GSO) Invest in Brazilian Co-invest in the equity real estate tran
Slide 5: What our portfolio companies are telling us
Global Financial Conference 2013 What our portfolio companies are telling us North America Europe Improving Outlook Slowly Healing Improving revenue outlook Steady to growing revenue growth Consumer spending Input costs flat to improving Price competition CapEx spending (largely automation and proce
Slide 6: All roads have led to good investment performance
Global Financial Conference 2013 All roads have led to good investment performance Hedge Fund Private Equity Real Estate Credit Solutions Net IRR of Blackstone Core Private Net IRR of Blackstone Global Net IRR of BAAM Core Composite Net IRR of Flagship Fund Returns Equity Funds vs. S&P TRI Real Esta
Slide 7: Good returns drive a virtuous cycle of capital raising and outperformance
Global Financial Conference 2013 Providing good investment returns over an extended period drives a virtuous cycle of capital raising and outperformance Fund $34 billion Investors pension funds, governments, $53 billion 3Q’13 LTM Capital Returned 3Q’13 LTM Capital Inflows universities and retail Sus
Slide 8: Industry-leading long term growth
Global Financial Conference 2013 Industry-leading long term growth Fee-Earning AUM Historical Performance ($ in billions) Total AUM AUM growth 28% per year(1) $248 Over 2x multiple on invested capital(2) 10%–18% returns for liquid funds(2) $168 $189 Credit $137 $108 Hedge Fund Solutions $94 $9
Slide 9: Solutions-oriented approach to drive better performance
Global Financial Conference 2013 All of Blackstone’s businesses use a solutions-oriented approach to drive better performance More than Just Money: Bottom-up strategy of transformation, engaging Portfolio Private Equity Operations team well in advance of investment Buy It, Fix It, Sell It: Acqui
Slide 10: Private Equity: bold and contrarian investments
Global Financial Conference 2013 Our Private Equity business made bold and contrarian investments when others were afraid, and focused on creating value in the portfolio What we Avoided What we Did Take privates Restructured $100+ billion of debt Auctions Energy Secondary LBOs Europe H
Slide 11: Real Estate weathered the downturn
Global Financial Conference 2013 Our Real Estate business weathered the economic downturn and solidified its position as one of the world’s premier opportunistic real estate investors What we Avoided What we Did Development Sold $60 billion ’05–’07 Partners Focused on value creation Recour
Slide 12: Hedge Fund Solutions redefined the business model
Global Financial Conference 2013 Hedge Fund Solutions redefined the business model, and leads the industry in innovation, focused on delivering custom-tailored portfolios What we Avoided What we Did Major blow-ups and fraud Diversified business Gating clients Preserved capital Provided $9bn
Slide 13: Credit business leveraged industry experience
Global Financial Conference 2013 Our Credit business leveraged deep industry experience and expansive knowledge of single-name credits to identify compelling opportunities What we Avoided What we Did Frothy high yield markets Leveraged brand and scale Duration risk Originated our own deals
Slide 14: The core tenet of Blackstone's culture is innovation
Global Financial Conference 2013 The core tenet of Blackstone’s culture is innovation Total AUM $102 billion in New Strategies ($ in billions) ($ in billions) $248 Customized / Event-Driven Customized $102 billion Credit Hedge Fund Solutions from new products that didn’t $26 $24 exist at time of IPO
Slide 15: Tactical Opportunities pursues investments outside traditional mandates
Global Financial Conference 2013 Tactical Opportunities pursues investments that fall outside of traditional fund mandates Broad, flexible Private Equity $4 billion Hedge Fund AUM mandate Credit Solutions Blackstone Tactical Opportunities Nimble and Attractive opportunistic cash yield Advisory & Str
Slide 16: New initiatives for BAAM
Global Financial Conference 2013 New initiatives for BAAM Purchasing minority GP interests in mature hedge funds • Typical targets have $5+ billion in AUM, strong franchises and attractive growth prospects • Compelling cash flow and capital appreciation potential • Expected $2 billion–$2.5 billion
Slide 17: Blackstone is gaining share in a growing sector
Global Financial Conference 2013 Blackstone is gaining share in a growing sector Capital Raised Since 2011 BX Capital Inflows ($ in billions) ($ in billions) Credit $120 $115 Acquisitions $38 Hedge Fund Solutions $23 $24 $32 $33 $26 $29 $29 $25 Private Equity Real Estate Apollo Oaktree KKR Carlyle T
Slide 18: Fundraising in retail channel has increased over tenfold
Global Financial Conference 2013 Fundraising in retail channel has increased over tenfold While institutional investors have ~20% allocation to alternatives, retail has less than 2% Retail / HNW market is $15 trillion in North America alone, which is double the institutional market Blackstone
Slide 19: Investment activity at record levels and realizations picking up
Global Financial Conference 2013 Investment activity remains at record levels and realizations are picking up substantially Total Invested Capital Total Realizations ($ in billions) ($ in billions) $26.0 Sustained active Realization momentum investment pace is building $18.7 $16.2 $15.6 $14.8 $13.1
Slide 20: Best house in the best neighborhood
Global Financial Conference 2013 Best house in the best neighborhood Secular Trends: Alternatives are the Cumulative Asset Growth(1) fastest growing segment in asset management 257% 9x Market Dynamics: Barriers to entry increasing as track record and investment platform dictate returns 28% Com
Slide 21: Our approach to BX stock valuation
Global Financial Conference 2013 Our approach to BX stock valuation Hypothetical Fee-Earning AUM 70% below our historic rate ($ in billions) $392 $189 If: 8% AUM growth 2x multiple on invested capital 7%–10% liquid fund returns Current 1 2 3 4 5 6 7 8 9 10 Years Hypothetical Distributable Earn
Slide 22: If long-term growth is higher (but still well below trend)
Global Financial Conference 2013 If long-term growth is higher (but still well below trend)… Hypothetical Fee-Earning AUM What if AUM grows ($ in billions) $571 12% instead of 8%? $189 Current 1 2 3 4 5 6 7 8 9 10 Years Hypothetical Distributable Earnings ($ per diluted unit) $3.75 Implied Stock Pri
Slide 23: Disruptive to traditional asset management and gaining share
Global Financial Conference 2013 Disruptive to traditional asset management and gaining share within faster growing alternative category Balanced Locked-In Client-centric High Growth Business Assets The largest and most Scale, leading businesses Nearly 70% of assets Sustained double-digit sophistica
Slide 24: World's leading alternatives firm, over $248 billion of AUM
Global Financial Conference 2013 Blackstone is the world’s leading alternatives firm, with over $248 billion of AUM Real Estate Private Equity $69 billion AUM $50 billion AUM(1) Strategic Partners Tactical Opportunities (Secondaries Business) (Flexible Mandates) $9 billion AUM $4 billion AUM Hedge F
Slide 25: Important Disclosures
Global Financial Conference 2013 Important Disclosures The preceding materials are provided as an overview of The Blackstone Group and are for informational purposes only, and do not constitute an offer to sell or a solicitation of interest in any particular Blackstone fund or strategy. Any such off
Slide 26: Important Disclosures (Cont'd)
Global Financial Conference 2013 Important Disclosures (Cont’d) Credit: Returns of mezzanine, rescue capital and hedge fund strategies are not representative of the returns of other debt strategies deployed by products managed by GSO Capital Partners LP or its affiliates (“GSO”). Any comparisons her