BackBlackstone, Apollo, Carlyle report slump in private equity portfolios in Jan-Mar
Together, these three firms manage over $1 trillion in assets across private equity, credit and real estatePrivate equity was Blackstone's worst performing asset class during the March quarter
PremiumMUMBAI: Global private equity majors Blackstone, Apollo Global Management and The Carlyle Group reported a sharp fall in the value of their private equity portfolios as the covid-19 pandemic ravaged markets and economies, forcing the firms to mark down their investments.
These three firms collectively manage over $1 trillion in assets across private equity, credit and real estate.
Apollo Global, which on Friday announced results for the quarter ended 31 March, reported a 21.6% decline in its private equity portfolio.
"Private equity fund depreciation during the quarter of (21.6%), driven by markdowns across public and private portfolio company holdings, including some impact from our energy holdings," the firm said in its earnings presentation.
Apollo's mainstay business of credit, with assets under management (AUM) of $210 billion, saw a depreciation of 8.1% and 14.8% in its corporate credit and structured credit strategies respectively, during the March quarter.
Overall, the firm's total AUM as of 31 March was down nearly 5% sequentially at $315.5 billion.
Last week, Blackstone, the world's largest alternative asset manager, also reported a 21.6% fall in the value of its private equity portfolio, largely on account of investments in the energy sector. Private equity was Blackstone's worst performing asset class in the quarter.
Blackstone’s total assets under management (AUM) fell 5.7% to $538 billion as on 31 March from $571 billion on 31 December.
"The crisis has seen some of the largest declines in value across asset classes and market volatility has reached an all-time high," Blackstone co-founder Stephen Schwarzman had said in an analyst call.
He, however, added that these markdowns reflect a “point in time value" and do not reflect the ultimate value that Blackstone expects to realise from its investments.
Another private equity major, Washington-based The Carlyle Group, reported an 8% depreciation in its PE portfolio.
Carlyle's overall AUM fell 3% sequentially to $217 billion in the March quarter.
Carlyle's co-chief executive officer Kewsong Lee said he expects private equity investments and exits to slow down in the short term.
"Traditional private equity exits will be put on hold as IPOs (initial public offerings) are delayed and sale processes are put on pause until M&A activity and confidence returns," said Lee, in an analyst call on Thursday.
"Investors will step back and assess the real impact of the pandemic on businesses, prospects and valuations. Financial investors mark to market faster than sellers, and thus, there is likely to be reduced deal activity until some of the uncertainty abates," he added.
Rival private equity major KKR is yet to announce its March quarter earnings.
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